	2013	2012	2011
Year to December 31,	$’M	$’M	$’M
	___________	___________	___________
Republic of Ireland	(47.8)	(74.7)	(65.9)
UK	10.9	30.7	45.4
US	1,153.3	683.8	774.6
Other jurisdictions	577.2	368.0	363.0
	___________	___________	___________
	1,693.6	1,007.8	1,117.1
	___________	___________	___________

The provision for income taxes by location of the taxing jurisdiction for the years to December 31, 2013, 2012 and 2011 consisted of the following:

Year to December 31,
	2013	2012	2011
	$’M	$’M	$’M
	__________	__________	__________
Current income taxes:
Republic of Ireland	-	-	(1.8)
US federal tax	274.3	230.0	201.4
US state and local taxes	17.9	11.3	9.2
Other	63.4	29.0	40.0
	__________	__________	__________
Total current taxes	355.6	270.3	248.8
	__________	__________	__________

Deferred taxes:
US federal tax	23.8	(63.8)	23.3
US state and local taxes	(8.3)	(6.5)	(4.6)
UK corporation tax	11.5	13.1	(1.0)
Other	(104.7)	(10.0)	(29.6)
	__________	__________	__________
Total deferred taxes	(77.7)	(67.2)	(11.9)
	__________	__________	__________
Total income taxes	277.9	203.1	236.9
	__________	__________	__________

The operating results associated with the DERMAGRAFT business have been classified as discontinued operations for all periods presented.

The Group has determined the amount of income tax expense or benefit allocable to continuing operations using the incremental approach described in ASC 740-20-45-8 and the relevant examples. As a result $9 million of income tax expense associated with the US operations was allocated to income from continuing operations for 2013 based on the primacy of continuing operations, due to changes in circumstances that caused a change in judgment about the realization of deferred tax assets in future years, and in accordance with the rules prescribed under ASC 740-20-45.

The amount of Income tax attributed to discontinued operations is disclosed in Note 8.

The reconciliation of income from continuing operations before income taxes, noncontrolling interests and equity in earnings/(losses) of equity method investees at the statutory tax rate to the provision for income taxes is shown in the table below:

Year to December 31,
		2013	2012	2011
		$’M	$’M	$’M
		___________	___________	___________
Income from continuing operations before income taxes and equity in earnings of equity method investees		1,693.6	1,007.8	1,117.1
		___________	___________	___________
Statutory tax rate⁽¹⁾		25.0%	25.0%	25.0%

Adjustments to derive effective rate:
Non-deductable items:
	US R&D credit	(4.5%)	(2.6%)	(4.5%)
	Effect of the convertible bond	0.5%	0.8%	0.8%
	Intra-group items⁽²⁾	(9.2%)	(16.0%)	(7.5%)
	Recognition of foreign tax credits	-	(6.6%)	-
	Other permanent items	(0.7%)	0.8%	(0.5%)
Other items:
Change in valuation allowance		0.9%	3.4%	3.2%
Impact of RESOLOR impairment		-	4.9%	-
Difference in taxation rates		7.8%	7.6%	4.6%
Change in provisions for uncertain tax positions		3.8%	1.1%	(1.2%)
Prior year adjustment		(3.4%)	0.8%	0.8%
Change in fair value of contingent consideration		(3.6%)	-	-
Change in tax rates		(0.2%)	0.8%	0.2%
Other		0.0%	0.1%	0.3%
		___________	___________	___________
Provision for income taxes on continuing operations		16.4%	20.1%	21.2%
		___________	___________	___________

(1) In addition to being subject to the Irish Corporation tax rate of 25%, in 2013 the Company is also subject to income tax in other territories in which the Company operates, including: Canada (15%); France (33.3%); Germany (15%); Italy (27.5%); Luxembourg (21.0%); the Netherlands (25%); Belgium (33.99%); Spain (30%); Sweden (22%); Switzerland (8.5%); United Kingdom (23.25%) and the US (35%). The rates quoted represent the statutory federal income tax rates in each territory, and do not include any state taxes or equivalents or surtaxes or other taxes charged in individual territories, and do not purport to represent the effective tax rate for the Company in each territory.

(2) Intra-group items principally relate to the effect of inter-company dividends, capital receipts (either taxable or non-taxable) and other intra-territory eliminations, the pre-tax effect of which has been eliminated in arriving at the Company's consolidated income from continuing operations before income taxes, noncontrolling interests and equity in earnings/(losses) of equity method investees.

The Company files income tax returns in the Republic of Ireland, the UK, the US (both federal and state) and various other jurisdictions (see footnote (1) to the table above for major jurisdictions). With few exceptions, the Company is no longer subject to income tax examinations by tax authorities for years before 1999. Tax authorities in various jurisdictions are in the process of auditing the Company's tax returns for fiscal periods from 1999; these tax audits cover a range of issues, including transfer pricing, potential restrictions on the utilization of net operating losses, potential taxation of overseas dividends and controlled foreign companies' rules.

While tax audits remain open, the Company also considers it reasonably possible that issues may be raised by tax authorities resulting in increases to the balance of unrecognized tax benefits, however, an estimate of such increase cannot be made.

The Company is required in certain tax jurisdictions to make advance deposits to tax authorities on receipt of tax assessments. These payments have been offset against the income tax liability within the balance sheet but have not reduced the provision for unrecognized tax benefits.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	2013	2012	2011
	$’M	$’M	$’M
	___________	___________	___________
Balance at January 1	278.7	265.5	290.8
Increases based on tax positions related to the current year	56.8	20.5	18.2
Decreases based on tax positions taken in the current year	(0.5)	-	(2.5)
Increases for tax positions taken in prior years	34.5	0.4	1.4
Decreases for tax positions taken in prior years	(0.8)	(3.3)	(12.0)
Decreases resulting from settlements with the taxing authorities	-	(10.6)	(25.7)
Decreases as a result of expiration of the statute of limitations	(0.6)	(0.3)	(0.5)
Foreign currency translation adjustments⁽¹⁾	(12.9)	6.5	(4.2)
	___________	___________	___________
Balance at December 31⁽²⁾	355.2	278.7	265.5
	___________	___________	___________

The Company considers it reasonably possible that certain audits currently being conducted will be concluded in the next twelve months, and as a result the total amount of unrecognized tax benefits recorded at December 31, 2013 could decrease by up to approximately $210 million. As at the balance sheet date, the Company believes that its reserves for uncertain tax positions are adequate to cover the resolution of these audits. However, the resolution of these audits could have a significant impact on the financial statements if the settlement differs from the amount reserved.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits within income taxes. During the years ended December 31, 2013, 2012 and 2011, the Company recognized $0.4 million, $5.1 million and $4.0 million in interest and penalties and the Company had a liability of $112.2 million, $119.6 million and $114.5 million for the payment of interest and penalties accrued at December 31, 2013, 2012 and 2011, respectively.

The significant components of deferred tax assets and liabilities and their balance sheet classifications, as at December 31, are as follows:

	December 31,	December 31,
	2013	2012
	$’M	$’M
	____________	____________
Deferred tax assets:
Deferred revenue	5.2	5.5
Inventory & warranty provisions	48.6	52.5
Losses carried forward (including tax credits)¹	500.6	425.7
Provisions for sales deductions and doubtful accounts	151.8	144.9
Intangible assets	10.7	36.7
Share-based compensation	25.5	32.7
Excess of tax value over book value of assets	22.1	-
Accruals and provisions	55.1	44.1
Other	2.6	21.6
	____________	____________
Gross deferred tax assets	822.2	763.7
Less: valuation allowance	(282.4)	(268.6)
	____________	____________
	539.8	495.1
Deferred tax liabilities:
Intangible assets	(586.8)	(702.7)
Excess of book value over tax value of assets and investments	(56.9)	(36.8)
	____________	____________
Net deferred tax liabilities	(103.9)	(244.4)
	____________	____________

Balance sheet classifications:
Deferred tax assets - current	315.6	229.9
Deferred tax assets - non-current	141.1	46.5
Deferred tax liabilities - non-current	(560.6)	(520.8)
	____________	____________
	(103.9)	(244.4)
	____________	____________

At December 31, 2013, the Company had a valuation allowance of $282.4 million (2012: $268.6 million) to reduce its deferred tax assets to estimated realizable value. These valuation allowances related primarily to operating loss, capital loss and tax-credit carry-forwards in Ireland (2013: $78.8 million; 2012: $73.9 million); the US (2013: $60.9 million; 2012: $37.2 million); Germany (2013: $30.8 million; 2012: $96.9 million); and other foreign tax jurisdictions (2013: $111.9 million; 2012: $60.6 million).

Management is required to exercise judgement in determining whether deferred tax assets will more likely than not be realized. A valuation allowance is established where there is an expectation that on the balance of probabilities management considers it is more likely than not that the relevant deferred tax assets will not be realized. In assessing the need for a valuation allowance, management weighs all available positive and negative evidence including cumulative losses in recent years, projection of future taxable income, carry forward and carry back potential under relevant tax law, expiration period of tax attributes, taxable temporary differences, and prudent and feasible tax-planning strategies.

The net increase in valuation allowances of $13.8 million includes (i) increases of $104.5 million primarily in respect of losses and other temporary differences in various jurisdictions where management consider that there is insufficient positive evidence in respect of the factors described above to overcome cumulative losses and therefore it is more likely than not that the relevant deferred tax assets will not be realized in full, and (ii) a decrease of $90.7 million primarily in respect of German tax losses ($67.4m), which based on the assessment of the factors described above now provides sufficient positive evidence to support that the losses are more likely than not to be realized. The release of this valuation allowance has been recorded in the current period due to changes in the financing of the German subsidiary.

At December 31, 2013, based upon a consideration of the factors described above management believes it is more likely than not that the Company will realize the benefits of these deductible differences, net of the valuation allowances. However, the amount of the deferred tax asset considered realizable could be adjusted in the future if these factors are revised in the future periods.

The approximate tax effect of NOLs, capital losses and tax credit carry-forwards as at December 31, are as follows:


	2013	2012
	$’M	$’M
	____________	____________
US federal tax NOLs	32.2	26.1
US state tax NOLs	61.5	31.4
UK NOLs	6.7	20.7
Republic of Ireland NOLs	78.8	72.6
Foreign tax jurisdictions	273.1	208.8
R&D and other tax credits	48.3	66.2
	____________	____________

The approximate gross value of NOLs and capital losses at December 31, 2013 is $2,583.7 million (2012: $1,783.5 million). The tax effected NOLs, capital losses and tax credit carry-forwards shown above have the following expiration dates:

The Company does not provide for deferred taxes on the excess of the financial reporting over the tax basis in investments in foreign subsidiaries that are essentially permanent in duration. At December 31, 2013, that excess totalled approximately $8.5 billion. The determination of additional deferred taxes is not practicable and is not provided.