Excel Force MSC Berhad Annual Report 2016

EXCEL FORCE MSC BERHAD ANNUAL REPORT 2016 91 Notes to the Financial Statements 31 December 2016 (cont’d) 25. TAX EXPENSE Group Company 2016 2015 2016 2015 RM RM RM RM Current year tax expense based on profit for the financial year 1,660,867 2,305,142 1,660,867 2,305,142 - Over provision in prior year (66,537) (60,460) (72,102) (63,155) 1,594,330 2,244,682 1,588,765 2,241,987 Real property gains tax - 109,814 - 109,814 Deferred tax (Note 20) - Relating to origination and reversal of temporary differences (56,211) (143,962) (56,211) (104,423) - Effect of changes in tax rate - (3,195) - (3,195) - Under/(Over) provision in prior year 42,553 (122,219) 42,553 (120,720) (13,658) (269,376) (13,658) (228,338) 1,580,672 2,085,120 1,575,107 2,123,463 The subsidiary, Insage (MSC) Sdn. Bhd. (‘Insage’) has been awarded Multimedia Super Corridor status by the Government of Malaysia. Accordingly, there is no tax charge on the business income of the subsidiary as the subsidiary has been granted Pioneer Status under the Promotion of Investments Act, 1986. The Pioneer Status was for the period from 23 March 2014 to 22 March 2019. The salient terms of the Pioneer Status are as follows: (i) 100% tax exemption on business income; (ii) unabsorbed pioneer capital allowances can be carried forward to the post pioneer period and deducted against the post-pioneer income of a business relating to the same promoted activity or promoted product; and (iii) unabsorbed pioneer losses can be carried forward to the post pioneer period and deducted against the post-pioneer income of a business relating to the same promoted activity or promoted product. The Malaysian income tax is calculated at the statutory tax rate of 24% (2015: 25%) of the estimated taxable profit for the fiscal year.