Domain: Accounting
Question:
According to the Consolidated Financial Statements 2024 (Unilever PLC, 2025), the tax provision reported by the company is €2,500 million, while the current tax is €2,835 million. Provide a theoretical explanation for the difference between these two amounts and identify the major items causing the reconciliation, and its impact on the financial statements.

Expected points in a correct answer:
Identify the income tax expense ("tax provision") reported in the consolidated income statement for 2024 as €2,500 million.
Identify current tax expense reported for 2024 as €2,835 million.
Extract deferred tax expense/(credit) amount from the tax note for 2024.
Calculate the difference between current tax and total tax provision as €335 million (€2,835m ? €2,500m).
Identify the effective tax rate for 2024 as disclosed in the tax note.
State that the tax provision differs from current tax due to deferred tax movements.
Identify deferred tax expense/(credit) as the reconciling line item between current tax and total tax.
Explicitly distinguish accounting effects from underlying economic performance.
Explain that current tax reflects cash taxes payable for the period.
Identify temporary differences as the source of deferred tax.
State that tax provision reflects accrual-based tax expense.
State that deferred tax does not directly affect cash flows.
Explain how deferred tax impacts the balance sheet through DTAs and DTLs.
State that deferred tax movements impact equity via OCI or profit or loss.
State that a lower tax provision than current tax implies a net deferred tax credit in the period.
Explain any divergence between related metrics as timing-, mix-, or accounting-driven rather than structural.
State that the effective tax rate differs from statutory rate due to reconciling items.
Explain why the headline change is economically meaningful beyond the raw numbers.
Explain why current tax can exceed tax provision in a given year.
Explicitly connect movements to broader market or operating conditions mentioned
Explain how the observed changes could affect stakeholder perceptions (investors, creditors).
State that the difference does not imply underpayment or overpayment of tax.
Explain the cash flow statement impact of current tax payments.
State why the chosen comparison period (Q/Q or Y/Y, as applicable) is appropriate for the analysis.
Explain how tax reconciliation improves transparency of tax profile.
State that reconciliation highlights sustainability of tax rate over time.
State whether deferred tax was a net credit or net charge in 2024.
Confirm that the reconciliation ties to the effective tax rate disclosure.
Identify non-deductible expenses as a reconciling item.
Identify prior-year tax adjustments recognised in 2024 as a reconciling item.
Identify changes in unrecognised deferred tax assets as a reconciling item.
Identify depreciation and amortization timing differences as a reconciling item.
Identify foreign taxes as reconciling items if disclosed.
Identify share-based payment tax differences as a reconciling item.
Identify withholding taxes as reconciling items if disclosed.
Identify whether any tax items were recognised in OCI in 2024.
Identify where current tax payable is presented on the balance sheet.
Identify where tax expense is presented on the income statement.
Confirm all tax figures are presented in € millions.
Explain limitations of the primary metric(s) used
Explain why complementary analysis is necessary.