2008 Annual Report - Kenford Group Holdings Limited

Notes to the Financial Statements
For the year ended 31 March 2008
11. INCOME TAX EXPENSE (Continued)
No provision for profi t tax in the Cayman Islands or British Virgin Islands has been made as the Group had no income
assessable for profi t tax in these jurisdictions for the year. Hong Kong Profi ts Tax is calculated at 17.5% (2007: 17.5%)
of the estimated assessable profi ts for the year. On 27 February 2008, the Financial Secretary of the Hong Kong Special
Administrative Region Government proposed a reduction in the Hong Kong Profi ts Tax rate from 17.5% to 16.5% with
effect from the fi scal year 2008/09. As a result of the change in tax rate, the change in the carrying amounts of deferred
tax assets and liabilities is refl ected in the consolidated fi nancial statements of the Group for the year.
Pursuant to the relevant laws and regulations in the People’s Republic of China (“PRC”), Dongguan Kario Electrical
Appliance Co., Ltd. (“DG Kario”), being a foreign investment enterprise, is subject to EIT rate of 24%, together with the
local EIT at a rate of 3%, DG Kario is subject to the aggregate EIT at a rate of 27%. DG Kario is also exempted from
enterprise income tax for two years starting from the fi rst year of profi table operations in 2003 after off-setting prior year
tax losses, followed by a 50% reduction in the applicable tax rate for the next three years.
Pursuant to the PRC EIT law passed by the Tenth National People’s Congress on 16 March 2007, the EIT rates for
domestic and foreign enterprises are unifi ed at 25% and was effective from 1 January 2008. All the Group’s subsidiaries
in PRC are subject to Mainland China Enterprise Income Tax at rate of 25% (2007: 27%).
The income tax expense for the year can be reconciled to the profi t per the consolidated income statement as follows:
2008 2007
HK$’000
HK$’000
Profi t before income tax expense 17,925 50,508
Tax calculated at the Hong Kong Profi ts Tax rate of 17.5% (2007: 17.5%) 3,137 8,839
Effect of different tax rates of a subsidiary operating in other jurisdiction 374 228
Tax concessions of a PRC subsidiary (467) (420)
Tax effect of income not taxable in determining taxable profi t (Note (i)) (1,631) (4,327)
Effect on deferred tax balances resulting from decrease in tax rate (113) –
Utilisation of temporary differences previously not recognised (631) (600)
Tax effect of expense not deductible for tax purpose 508 181
(Over)/under provision of deferred tax liability in prior years (848) 76
Under provision of current tax in respect of prior years 198 58
Others (292) 158
Income tax expense 235 4,193
Note:
(i)
This amount mainly represented the tax effect of the 50% of assessable profi ts of a subsidiary, Kenford Industrial Company Limited (“Kenford HK”)
which was exempted under Departmental Interpretation and Practice Notes No. 21 issued by the Inland Revenue Department of Hong Kong in respect
of claiming 50% of all the Kenford HK manufacturing profi ts as offshore in nature and non-taxable.
12. PROFIT ATTRIBUTABLE TO SHAREHOLDERS
Profi t attributable to shareholders includes an amount of HK$9,654,000 (2007: HK$20,712,000) which has been dealt
with in the fi nancial statements of the Company.
Annual Report 2008
57