2012 Annual Report - ZTE

ZTE CORPORATIONNotes to Financial Statements(Prepared under Hong Kong Financial Reporting Standards)31 December 201210. INCOME TAX2012 2011RMB’000 RMB’000Group:Current — Hong Kong (5,380) 2,974Current — Mainland China 584,672 799,675Current — Overseas 131,898 152,152Deferred (note 40) (89,769) (562,758)Total tax charge for the year 621,421 392,043Hong Kong profits tax has been provided at the rate of 16.5% (2011: 16.5%) on the estimated assessableprofits arising in Hong Kong during the year. Taxes on profits assessable elsewhere have been calculatedat the rates of tax prevailing in the jurisdictions in which the Group operates, based on existing legislation,interpretations and practices in respect thereof.Under the new enterprise income tax law of the PRC effective from 1 January 2008, the tax rate applicableto domestic-invested enterprises and foreign-invested enterprises has been standardised at 25%.As a hi-tech enterprise in Shenzhen, the Company has obtained the certificate as a national-grade hi-techenterprise, with which the Company enjoyed an enterprise income tax rate of 15% for the years from 2011to 2013.Major subsidiaries operating in Mainland China that enjoyed preferential tax rates are as follows:Xi’an Zhongxing New Software Company Limited, recognised as a software enterprise in December 2009,was entitled to enterprise income tax exemption in the first and second profitable years and was entitled toa 50% reduction in enterprise income tax from the third to the fifth years pursuant to Document Cai Shui(2008) No. 1. The current year is its fourth profitable year and a 50% reduction in the enterprise incometax rate of 25% is applicable.Nanjing Zhongxingxin Software Company Limited, recognised as a software enterprise in December 2009,has been entitled to enterprise income tax exemption in the first and second profitable years and a 50%reduction in enterprise income tax from the third to the fifth years pursuant to Document Cai Shui (2008)No. 1. The current year is its third profitable year.Shenzhen Zhongxing ICT Company Limited, recognised as a software enterprise in September 2009, wasentitled to enterprise income tax exemption in the first and second profitable years and was entitled to a50% reduction in enterprise income tax from the third to the fifth years pursuant to Document Shen GuoShui Jian Mian Bei An (2009) No. 383. The current year is its fourth profitable year and a 50% reduction inthe enterprise income tax rate of 25% is applicable.370