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Note 8 - Income Tax
 12 Months Ended
Dec. 31, 2017
Statement Line Items [Line Items]  
Disclosure of income tax [text block]
8
Income tax
 
    Year ended December 31,  
(all amounts in thousands of U.S. dollars)   2017     2016     2015  
                   
Current tax    
184,016
      
174,410
      
164,562
  
Deferred tax    
(100,432
 )    
(132,969
 )    
79,943
  
     
83,584
      
41,441
      
244,505
  
From discontinued operations    
(100,720
 )    
(24,339
 )    
(10,121
 )
     
(17,136
 )    
17,102
      
234,384
  
 
The tax on Tenaris’s income before tax differs from the theoretical amount that would arise using the tax rate in each country as follows:
 
    Year ended December 31,  
(all amounts in thousands of U.S. dollars)   2017     2016     2015  
                   
Income before income tax    
427,711
      
34,430
      
140,829
  
                         
Tax calculated at the tax rate in each country (*)    
6,456
      
(91,628
 )    
(71,588
 )
Non taxable income / Non deductible expenses, net (*)    
40,298
      
51,062
      
149,632
  
Changes in the tax rates    
(62,968
 )    
4,720
      
6,436
  
Effect of currency translation on tax base (**)    
(922
 )    
105,758
      
151,615
  
Accrual / Utilization of previously unrecognized tax losses (***)    
-
      
(52,810
 )    
(1,711
 )
Tax charge    
(17,136
 )    
17,102
      
234,384
  
 
(*) Include the effect of the impairment charges of approximately
$400.3
million in
2015.
 
(**) Tenaris applies the liability method to recognize deferred income tax on temporary differences between the tax basis of assets and their carrying amounts in the financial statements. By application of this method, Tenaris recognizes gains and losses on deferred income tax due to the effect of the change in the value on the tax basis in subsidiaries (mainly Mexico, Argentina and Colombia), which have a functional currency different than their local currency. These gains and losses are required by IFRS even though the revalued / devalued tax basis of the relevant assets will
not
result in any deduction / obligation for tax purposes in future periods.
 
(***)  It includes a deferred tax income of approximately
$45
million booked in the last quarter of
2016
related to a capital loss. Amount was carried forward in line with US Regulation in force, and offset in
2017
Capital Gains.
 
Changes in the tax rates:
On
December 29, 2017
Argentina enacted amendments to several tax laws, including among others a reduction in the corporate income tax rate from
35%
to
30%
for fiscal years starting
1
January 2018
to
31
December 2019
and to
25%
going forward. The impact booked in the Company income tax charge of the year was a gain of approximately
$46
million of deferred tax income.
 
On
December 22, 2017
the U.S. enacted significant changes to U.S. tax law. The reform is complex and considers significant changes to the U.S. corporate income tax system by, among others, reducing the Federal corporate income tax rate from
35%
to
21%.
The Company has made a reasonable estimate of the financial impacts of the reform. However, given its significant changes and complexities, and considering that more accurate information on the impact and the modalities of its application will be obtained in subsequent reporting periods, certain measurement adjustments could be needed.
 
The impact booked in the Company income tax charge of the year was a gain of approximately
$15.2
million of deferred tax income.
 
Tax charge
of the year has been affected by an extraordinary charge related to the settlement agreement with the Italian tax authorities (see Note
25
).