Sun Art Retail Group Limited - TodayIR.com

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 5 INCOME TAX (a) Income tax in the consolidated statement of comprehensive income represents: Year ended 31 December 2012 2011 RMB million RMB million Current tax – Hong Kong Profits Tax Provision for the year 2 – Current tax – PRC income tax Provision for the year 972 871 (Over)/under-provision in respect of prior years (9) 14 965 885 Deferred tax Reversal/(origination) of temporary differences (note 21) 8 (54) 973 831 (i) (ii) (iii) (iv) The provision for Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profits of the Company and its subsidiaries incorporated in Hong Kong (2011:16.5%). The payments of dividends by Hong Kong companies are not subject to any Hong Kong withholding tax. Pursuant to the rules and regulations of the Cayman Islands and the British Virgin Islands, the Group is not subject to any income tax in the Cayman Islands and the British Virgin Islands. All PRC subsidiaries are subject to income tax at 25% for the year ended 31 December 2012 (2011: 25% except one subsidiary at 24%) under the Enterprise Income Tax law (“EIT law”) which was enacted on 16 March 2007. The EIT law and its relevant regulations also impose a withholding tax at 10%, unless reduced by a tax treaty/arrangement, on dividend distributions made out of the PRC from earnings accumulated from 1 January 2008. Undistributed earnings generated prior to 1 January 2008 are exempted from such withholding tax. Under the Arrangement between the Mainland of China and Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, a qualified Hong Kong tax resident which is the “beneficial owner” and holds 25% or more of the equity interest in a PRCresident enterprise is entitled to a reduced withholding tax rate of 5% on dividends received. Sun Art Retail Group Limited Annual Report 2012 79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 5 INCOME TAX (CONTINUED) (a) Income tax in the consolidated statement of comprehensive income represents: (continued) (iv) (continued) Since the Group can control the quantum and timing of distribution of profits of the Group’s PRC subsidiaries, deferred tax liabilities are only provided to the extent that such profits are expected to be distributed in the foreseeable future. As at 31 December 2012, deferred tax liabilities of RMB53 million (2011: RMB34 million) have been recognised in respect of the withholding tax payable on the retained profits of the Group’s PRC subsidiaries generated subsequent to 1 January 2008 which the directors expect to distribute outside the PRC in the foreseeable future. The deferred tax liabilities as at 31 December 2012 were calculated at the withholding tax rate of 5% (2011: 5%). On 1 May 2010, CIC received an advance ruling from its tax authority in-charge confirming that the reduced withholding tax rate of 5% would be applied on its dividends to RT-Mart Holdings Limited. The valid period of the ruling is from 1 May 2010 to 30 April 2013. On 12 July 2012, Announcement [2012] No. 30 (Announcement 30) dated 29 June 2012 was released by the State Administration of Taxation (SAT). Announcement 30 explicitly states that a company that is a tax resident of a Double Taxation Agreement (DTA) partner state and is listed in that jurisdiction (Listed Parent) will automatically satisfy the beneficial ownership criteria in respect of PRC dividends received. Furthermore, subsidiaries that are wholly owned by the Listed Parent, directly and/ or indirectly, and are tax residents of the same DTA partner state, may also be automatically regarded as the beneficial owners of any PRC dividends they receive. Accordingly, dividends receivable by RT-Mart Holdings Limited and ACHK should be subject to 5% withholding tax rate. On 15 July 2012, ACI obtained the notification from Shanghai Yangpu National Tax Bureau confirming it is eligible for the reduced withholding tax rate on dividends of 5% for the year ended 31 December 2012. (b) Reconciliation between income tax expense and accounting profit at applicable tax rates: Year ended 31 December 2012 2011 RMB million RMB million Profit before taxation 3,506 2,816 Notional tax on profit before taxation, calculated at PRC income tax rate of 25% 877 704 Non-deductible expenses, less non-assessable income 34 67 PRC dividend withholding tax 42 28 Current year losses for which no deferred tax asset was recognised 60 53 Utilisation of previously unrecognised tax losses (31) (35) (Over)/under-provision in respect of prior years (9) 14 Actual tax expenses 973 831 80 Sun Art Retail Group Limited Annual Report 2012
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Sun Art Retail Group Limited (Incor
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CORPORATE INFORMATION DIRECTORS Exe
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CHAIRMAN’S STATEMENT Dear Shareho
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CHIEF EXECUTIVE OFFICER’S STATEME
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MANAGEMENT DISCUSSION AND ANALYSIS
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