The components of net periodic retirement benefit expenses for the years ended December 31, 2013 and 2012 were outlined as follows: Millions of yen Thousands of U.S. dollars 2013 2012 2013 Service cost...................................................... \ 415 \ 492 $3,944 Interest cost..................................................... 142 156 1,352 Expected return on plan assets........... (78) (80) (741) Amortization of actuarial loss............... 325 417 3,085 Amortization of unrecognized prior service cost........................................ (43) (19) (410) Other (*).............................................................. 284 284 2,703 Total...................................................................... \1,047 \1,251 $9,934 (*) Contribution to defined contribution plan The assumptions used in accounting for the defined benefit plans for the years ended December 31, 2013 and 2012 were as follows: 2013 2012 Discount rate........................................................................ Mainly 1.5% Mainly 1.5% Expected rate of return on plan assets................ Mainly 1.0% Mainly 1.0% 21. Income Taxes The Company and its domestic consolidated subsidiaries are subject to a number of taxes based on earnings, i.e. corporation tax, inhabitants’ taxes and enterprise tax, which, in the aggregate, resulted in a statutory tax rate of approximately 37.8% and 40.5% for the years ended December 31, 2013 and 2012, respectively. The effective tax rates reflected in the consolidated statements of income for the years ended December 31, 2013 and 2012 differ from the statutory tax rates for the following reasons: 2013 2012 Statutory tax rate....................................................................... 37.8% 40.5% Effect of: Permanent difference . entertainment expenses.... 0.5 0.6 Permanent difference . dividend income.......... (0.9) (0.5) Inhabitants’ per capita taxes........................................ 0.5 0.5 Amortization of goodwill............................................... 0.0 0.0 Equity in earnings of affiliates..................................... (0.8) (0.8) Valuation allowance.......................................................... (3.1) (2.7) Different tax rates applied to income of foreign consolidated subsidiaries.......................... (0.8) (0.9) Tax deduction of experiment and research expenses................................................. (1.5) (1.9) Income taxes-prior years................................................ . (4.9) Other, net................................................................................. 1.1 0.8 Effective tax rates....................................................................... 32.9% 30.7% Significant components of deferred tax assets and liabilities as of December 31, 2013 and 2012 were as follows: Millions of yen Thousands of U.S. dollars 2013 2012 2013 Deferred tax assets: Loss on valuation of investment securities........................ \ 658 \1,064 $ 6,247 Elimination of unrealized profit..... 2,069 2,413 19,636 Accrued retirement benefits........... 635 824 6,029 Accrued enterprise tax....................... 197 336 1,875 Net operating loss carry forwards.... 55 89 523 Impairment loss on property, plant and equipment........................ 1,455 1,304 13,814 Accrued costs of removing facilities............................... 913 1,008 8,667 Other.............................................................. 1,190 1,087 11,295 Gross deferred tax assets................... 7,176 8,128 68,090 Valuation allowance............................. (1,766) (2,616) (16,761) Total deferred tax assets.......................... 5,409 5,512 51,328 Deferred tax liabilities: Reserve under Special Taxation Measures Law........................................ (303) (323) (2,877) Undistributed earnings of overseas partnerships....................... (247) (159) (2,350) Gain on contribution of securities to retirement benefit trust............... (600) (621) (5,695) Unrealized holding gain on available-for-sale securities.... (2,249) (684) (21,344) Other.............................................................. (9) (57) (94) Total deferred tax liabilities.................... (3,410) (1,847) (32,361) Net deferred tax assets.............................. \1,998 \3,664 $18,967 Following the promulgation of the “Act for Partial Amendment of the Income Tax Act, etc.” on March 31, 2014, the special restoration surtax will be not imposed from fiscal years beginning on April 1, 2014. As a result, the domestic statutory tax rate to calculate deferred tax assets and liabilities will be reduced from the current 37.8% to 35.4% for temporary differences expected to reverse in fiscal years beginning on or after January 1, 2015. The effect of this change in tax rates is considered immaterial. Notes to Consolidated Financial Statements 44 Annual Report 2013