Full Annual Report 2006 - Singapore Technologies Engineering

185
Notes to the Financial Statements 31 DECEMBER 2006
(Currency – Singapore dollars unless otherwise stated)
39. TAXATION
GROUP
2006 2005
$’000 $’000
Current income tax
Current year 115,321 95,554
Overprovision in respect of prior years (13,762) (9,095)
Associated companies 7,748 8,728
109,307 95,187
Deferred income tax
Current year 894 (2,151)
Overprovision in respect of prior years (1,306) (1,043)
108,895 91,993
Deferred income tax related to items charged or credited directly to equity:
Net change in fair value of available-for-sale financial assets 3,344 (1,046)
Net change in fair value of derivative financial instruments designated in cash flow hedges (161) (385)
3,183 (1,431)
The Group
As at 31 December 2006, subsidiaries of the Group have potential tax benefits of approximately $40,125,000 (2005:
$36,885,000) arising from unutilised tax losses, unabsorbed wear and tear allowances and other temporary differences, which
are available for set-off against future taxable profits. These tax benefits have not been recognised in the financial statements
due to the uncertainty of its recoverability. The use of these potential tax benefits is subject to the agreement of the tax
authorities and compliance with certain provisions of the tax legislation of the respective countries in which the subsidiaries
operate.
A reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for
the years ended 31 December is as follows:
Profit from continuing operations before taxation 564,339 503,245
Taxation at statutory tax rate of 20% 112,868 100,649
Adjustments :
Income not subject to tax (21,892) (7,022)
Expenses not deductible for tax purposes 20,264 6,608
Higher effective tax rates of other countries 15,523 4,057
Overprovision in prior years, net (15,068) (10,138)
Income subject to concessionary tax rates (4,444) (3,010)
Deferred tax assets not recognised 6,403 10,468
Deferred tax assets previously not recognised now recognised (3,432) (6,304)
Others (1,327) (3,315)
Current financial year’s taxation charge 108,895 91,993