Annual Report 2012 - Dialog

Annual Report 2012 l Dialog Axiata PLC l 117
In accordance with terms of the investment agreement with BOI, the Company opted for 2% revenue based tax
with effect from the year 2013 at the expiration of 15 year tax holiday period. Subsequent to the approval of the
BOI on 20 March 2012, selection of revenue based tax option has been notified to and acknowledged by the
Department of Inland Revenue on 7 August 2012. Accordingly, the deferred tax liability of Rs. 2,277,016,844 has
been reversed to the statement of comprehensive income.
(c) Under the agreement entered into between DBN and BOI of Sri Lanka and in accordance with Section 17 of
BOI Law No. 4 of 1978, DBN has been granted a seven-year tax holiday period commencing from the year of
assessment 1999/2000 and ended in the year of assessment 2005/2006. Further the additional tax exemption
period of 5 years was granted subsequently, which commenced from year of assessment 2005/ 2006 and ended in
2010/2011. After the expiration of the additional tax exemption period, the profits and income of DBN shall, for any
year of assessment, be charged at the rate of fifteen per centum (15%).
(d) Under the agreement entered into between DTV and the BOI, the main source of income of the DTV is exempt from
income tax for a period of three years from the year of assessment, commencing either from the year in which it first
makes a profit, or any year of assessment no later than two years from the date of commencement of commercial
operations whichever is earlier. DTV commenced commercial operations during the year 2007. Upon expiry of
the exemption period, DTV’s profits and income will be subject to a corporate tax of 10 per cent for a period of
two years immediately succeeding the last date of the exemption period. After the expiration of the aforesaid
concessionary tax rate of 10%, the profits and income of the enterprise shall be charged at the rate of 20% for any
year of assessment.
(e) The tax on the profit before tax differs from the theoretical amount that would arise using the applicable tax rate to
profits is as follows:
Group Company
2012 2011 2012 2011
Profit before tax
Add:
4,065,526 5,448,219 4,216,755 6,389,296
Amortisation of increase in fair value of licenses 50,286 50,286 Nil Nil
Other consolidation adjustments 9,640 (8,794) Nil Nil
4,125,452 5,489,711 4,216,755 6,389,296
Tax at the applicable rate
Tax effects of:
1,155,127 1,537,119 1,180,691 1,789,003
- Income not subject to tax (850,359) (802,004) (624,650) (1,279,833)
- Associates results reported net of tax 2,391 (2,711) Nil Nil
- Expenses not deductible for tax purposes 581,162 1,093,447 512,601 416,487
- Unrecognised differed tax (835,656) (1,343,921) (1,011,545) (447,925)
- ESC write off 4,311 125,181 (41,653) 114,385
- Utilisation of previously unrecognised tax losses (38,229) (16,210) (18,336) (15,072)
- Over provision of tax (10,475) (12,244) 2,316 (10,807)
- Net reversal of deferred tax (1,972,933) Nil (1,972,933) Nil
(1,964,661) 578,657 (1,973,509) 566,238
The applicable tax rate for the Group and the Company was 28% (2011 - 28%).