26 TAX EXPENSE
Group
2015
2014
$’000
$’000
Current tax expense
Current year
2,591
2,182
Overprovision in prior years
73
(42)
2,664
2,140
Deferred tax expense
Origination and reversal of temporary differences
(527)
43
Underprovision in prior years
–
16
(527)
59
Tax expense
2,137
2,199
Reconciliation of effective tax rate
Profit before taxation
12,155
11,412
Income tax using Singapore tax rate of 17% (2014: 17%)
2,066
1,940
Tax effect of:
– Income taxed at concessionary tax rate
(16)
(25)
– Non-deductible expenses
409
481
– Non-taxable income
(141)
(41)
– Tax incentives
(850)
(724)
– Deferred tax asset not recognised
106
32
Effect of different tax rates in other countries
490
562
Overprovision in respect of prior years’ tax
73
(26)
2,137
2,199
On 18 February 2011, the Minister of Finance announced in his Budget Speech a new tax scheme called the Productivity and
Innovation Credit scheme (“PIC”), which allows businesses that invest in a range of productivity and innovation activities to claim
enhanced deductions and/or allowances at 400% of expenditure incurred for each category of activity from year of assessment
2011 to 2018. Accordingly, the tax charge of the Group had been reduced based on the above tax incentives.
In the ordinary course of business, there are many transactions and calculations for which the ultimate tax treatment is
uncertain. Therefore, the Group recognises tax liabilities based on estimates of whether additional taxes and interest will be
due. These tax liabilities are recognised when the Group believes that certain positions may not be fully sustained upon review
by tax authorities, despite the Group’s belief that its tax return positions are supportable. The Group believes that its accruals
for tax liabilities are adequate for all open tax years based on its assessment of many factors including interpretations of
tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of multifaceted
judgements about future events. New information may become available that causes the Group to change its judgement
regarding the adequacy of existing tax liabilities, such changes to tax liabilities will impact tax expense in the period that such
a determination is made.
104
TELECHOICE INTERNATIONAL LIMITED
2015 ANNUAL REPORT
NOTES TO THE
FINANCIAL STATEMENTS
