Sun Art Retail Group Limited - TodayIR.com

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