This item comprises the income taxes paid or accrued in the individual countries, plus deferred taxes.
 
The breakdown of income taxes by origin is as follows:

In fiscal 2005 changes in tax rates decreased deferred tax expense by EUR 2 million (2004: EUR 5 million).
 
The deferred tax assets and liabilities are allocable to the various balance sheet items as follows:

The following income tax assets and liabilities are therefore recognized in the balance sheet:

In 2005, deferred tax assets of EUR 9 million and deferred tax liabilities of EUR 47 million relate to changes in the scope of consolidation. Utilization of tax loss carryforwards from previous years diminished the amount of income taxes paid or accrued in 2005 by EUR 97 million (2004: EUR 39 million).
 
The value of existing tax loss carryforwards by expiration date is as follows:

Deferred tax assets of EUR 786 million (2004: EUR 499 million) are recognized on the EUR 2,031 million (2004: EUR 1,282 million) in tax loss carryforwards. It is considered that sufficient income will be available in the future to utilize these tax assets. Recognition of these deferred tax assets results in deferred tax income of EUR 105 million (2004: EUR 167 million). No deferred tax assets are recognized on tax loss carryforwards totaling EUR 687 million (2004: EUR 218 million); these carryforwards can theoretically be utilized over more than one year. In Germany, tax loss carryforwards can be utilized against the whole of the first EUR 1 million of current taxable income but only against 60 percent of the remainder.
 
Deferred tax assets relating to deductible temporary differences and tax loss carryforwards are carried at the amount considered sufficiently likely to be recoverable in the future by offsetting against actual taxable income. In light of operating losses recently experienced in certain jurisdictions, consideration was given to the taxable income available to the Group along with prudent and feasible tax planning strategies. Based on the results of this assessment, valuation allowances of EUR 261 million for 2005 and EUR 85 million for 2004 were recorded against deferred taxes relating to loss carryforwards. These valuation allowances relate primarily to certain types of operating loss carryforwards, capital loss carryforwards, foreign tax credit carryforwards and charitable contribution carryforwards.
 
The increase in tax loss carryfowards and the associated deferred tax assets relating to continuing operations in 2005 is attributable to the earnings-neutral spin-off of the LANXESS subgroup effective January 31, 2005, which gave rise to EUR 458 million in tax loss carryforwards and EUR 183 million in deferred tax assets. The additional carryforwards arose because tax regulations required that the spin-off balance sheet of LANXESS as of January 31, 2005 reflect the amount of loss carryforwards assigned to the operations that were actually spun off, and this amount differed from that previously assigned to the respective discontinued operations of the Bayer Group on the basis of origin. The LANXESS data for 2004 are presented from the standpoint of the Bayer Group as part of the segment reporting for that year and are not intended to portray either these discontinued operations or the continuing operations of Bayer as separate entities. The EUR 560 million change in tax loss carryforwards compared with the prior year also results from completed tax audits and from losses to be declared on the spin-off of the LANXESS subgroup. Deferred tax assets were not recognized in relation to EUR 224 million of the increase in loss carryforwards.
 
The Bayer Group recently entered into a closing agreement with the Internal Revenue Service (IRS) in the United States for the tax years 1992 through 1998 resulting in certain adjustments to our federal income tax liability for those years. Accordingly, our fiscal year 2005 tax provision has been reduced by EUR 104 million as a result of reversing previously established reserves in excess of the additional tax liability assessed by the IRS for the 1992-2002 tax years.
 
Deferred taxes have not been recognized for temporary differences of EUR 4,283 million (2004: EUR 3,662 million) relating to earnings of foreign subsidiaries, either because these profits are not subject to taxation or because they are to be reinvested for an indefinite period. If deferred taxes were recognized for these temporary differences, the liability would be based on the respective withholding tax rates only, taking into account the German tax rate of 5 percent on corporate dividends where applicable. The amount of these unrecognized deferred tax liabilities could not be derived with reasonable effort.
 
The actual tax expense for 2005 is EUR 641 million (2004: EUR 473 million). This figure differs by EUR 133 million (2004: EUR 45 million) from the expected tax expense of EUR 774 million (2004: EUR 428 million) that would result from applying to the pre-tax income of the Group a tax rate of 35.2 percent (2004: 35.1 percent), which is the weighted average of the theoretical tax rates for the individual Group companies.
 
The reconciliation of theoretical to actual income tax expense (income) for the Group is as follows:

17. Minority stockholders’ interest in income/losses

Minority interest in income amounts to EUR 21 million (2004: EUR 13 million), and minority interest in losses to EUR 23 million (2004: EUR 16 million).

Note [3] explains the main effects on the Bayer Group of changes in accounting standards. The following table shows the effect on earnings per share of those standards that have a material impact on the income statement of the Bayer Group. Since there are no subscription rights outstanding, basic and diluted earnings per share are identical.

Under the German Stock Corporation Act, the sum available for payment of the dividend is determined from the balance sheet profit shown in the annual financial statements for Bayer AG prepared in accordance with the German Commercial Code.
 
The dividend per share paid for the 2004 fiscal year was EUR 0.55 (2003: EUR 0.50). The proposed dividend for fiscal 2005 is EUR 0.95 per share. Payment of the proposed dividend is contingent upon approval by the stockholders at the Annual Stockholders’ Meeting and has not been recognized as a liability in the consolidated financial statements for the Bayer Group.