Maxis Berhad | Annual Report 2013

97 OVERVIEW OUR BUSINESS STRATEGIC REVIEW CORPORATE GOVERNANCE FINANCIAL STATEMENTS Maxis Berhad Annual Report 2013 OTHER INFORMATION 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (p) Provisions for liabilities and charges (continued) (ii) Contract obligations and legal claims Provisions for contract obligations and legal claims are made in respect of network and content costs. Contract obligations are measured at the lower of cost to fulfil the contract or the cost to exit it. (iii) Staff incentive scheme Provision for staff incentive scheme is based on management’s best estimate of the amount payable as at reporting date based on the performance of individual employees and financial performance of the Group. (iv) Restructuring costs Provision for restructuring costs is made in respect of employees termination payments under the Career Transition Scheme (“CTS”) based on management’s best estimate of the amount payable as at reporting date offered to selected employees. See accounting policy Note 3(t)(ii) on employee termination benefits. (q) Income taxes The tax expenses for the period comprise current and deferred tax. Tax is recognised in statement of profit or loss except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. Current tax expenses are determined according to the tax laws of each jurisdiction in which the Group operates and include all taxes based upon the taxable profits (including withholding taxes payable by foreign subsidiaries on behalf of their parent on distribution of retained earnings to companies in the Group), and real property gains taxes payable on disposal of properties. Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amounts attributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements. However, deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, investment tax allowance or unused tax losses can be utilised. Deferred tax is provided on temporary differences arising on investments in subsidiaries except for deferred tax liability where the timing of the reversal of the temporary differences is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. The measurement of deferred tax liabilities and deferred tax assets shall reflect the tax consequences that would follow from the manner in which the entity expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred and current tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to taxes levied by the same taxation authority or either the taxable entity or different taxable entities when there is an intention to settle the balances on a net basis.