Annual Report 2006 - Venture Corporation Limited

notes to financial statements
December 31, 2006
27 INCOME TAX EXPENSE (Cont’d)
Three subsidiaries in Malaysia were granted Pioneer Status which exempts profits derived from pioneer products from
income tax for the following periods:
a) Technocom Systems Sdn Bhd : 10 years commencing January 1, 2002.
b) Pintarmas Sdn Bhd : 6 years commencing January 1, 2001.
c) Venture Electronics Services :
(Malaysia) Sdn Bhd
5 years commencing September 1, 2001 (for removable disk
drives, tape drives and cartridge storage media).
5 years commencing August 10, 2004 (for communications and networking
equipment, data processing equipment and medical scientific equipment
and instrumentation).
Following the acquisition of GES International Ltd during the financial year, the group has acquired a subsidiary, GES
(Singapore) Pte Ltd, a Singapore incorporated company which was granted Pioneer Status that will expire on May
31, 2007. The Pioneer Status is subject to agreement by the Singapore tax authorities and compliance with certain
provisions of the economic expansion incentive.
The group has estimated tax losses carryforwards which are available for offsetting against future taxable income as
follows:
2006 2005
$’000 $’000
Amount at beginning of year 21,024 15,867
Amount in current year 1,182 12,555
Arising from acquisition of subsidiary 29,000 (a) -
Amount utilised in current year (22) (7,398)
51,184 21,024
Deferred tax benefit on above not recorded 10,237 4,205
(a)
Subject to the agreement by the tax authorities, the group has unutilised tax losses of $29,000,000 arising from the
acquisition of GES International Ltd, available for offsetting against future profits. No deferred tax assets have been
recognised in respect of these tax losses as the quantum has not been finalised with the tax authorities and is subject
to ministerial waiver of the change in ownership test.
The group has estimated temporary differences from capital allowances available for offsetting against future taxable
income as follows:
2006 2005
$’000 $’000
Amount at beginning and end of year 406 406
Deferred tax benefit on above not recorded 81 81
The realisation of the future income tax benefits from tax loss carryforwards and temporary differences from capital
allowances is available for an unlimited future period subject to the conditions for deductibility imposed by law, including
the retention of majority shareholders as defined.
Group Relief
Subject to the satisfaction of the conditions for group relief, $10,091,000 (2005: $2,245,000) of tax losses incurred
by the Singapore incorporated subsidiaries during the year were transferred to the company under the group relief
system.
80 venture corporation limited