United Energy Group Limited - HKExnews

Annual Report 2009
Notes to the Financial Statements
For the nine months ended 31 December 2009
10. INCOME TAX EXPENSE/(CREDIT) (Continued)
The reconciliation between the income tax expense/(credit) and the product of loss before tax multiplied by the
PRC enterprise income tax rate is as follows:
For the
For the
nine months twelve months
ended 31 ended 31
December 2009 March 2009
HK$’000
HK$’000
Loss before tax (excluding share of results of associates) (144,711) (581,703)
Tax at the statutory PRC enterprise income tax rate of 25% (36,178) (145,426)
Tax effect of income that is not taxable (18,852) (12,940)
Tax effect of expenses that are not deductible 39,552 29,167
Tax effect of tax losses not recognised 18,545 78,440
Tax effect of utilisation of tax losses not previously recognised (931) (897)
Tax effect of temporary differences not recognised 2,224 2,683
Tax effect of tax preferential period 303 –
Under-provision in prior years – 11
Effect of different tax rates of the Company and its subsidiaries (2,078) 38,788
Income tax expense/(credit) 2,585 (10,174)
Under the new PRC Enterprise Income Tax law, from 1 January 2008, non-resident enterprises without an
establishment or place of business in the PRC or which have an establishment or place of business in the PRC but
whose relevant income is not effectively connected with the establishment or a place of business in the PRC, will
be subject to withholding tax at the rate of 10% (under reduced by treaty) on various types of passive income such
as dividends derived from sources within the PRC.
According to the notice Caishui 2008 No. 1 released by the Ministry of Finance and the State Administration of
Taxation, distributions of the pre-2008 retained profits of a foreign invested enterprise to a foreign investor in 2008
or after are exempted from withholding tax. Accordingly, the retained profits as at 31 December 2007 in the Group’s
PRC subsidiaries will not be subject to 10% withholding tax on future distributions.
The Group is liable to withholding tax on dividends distributed from the Group’s PRC subsidiaries in respect of
their profits generated on or after 1 January 2008. No deferred tax liabilities have been recognised in respect of
this as the Group considers that as of the end of reporting periods, no such liability will be arisen in the foreseeable
future.
63