ACCOUNTABILITY | NOTES TO THE FINANCIAL STATEMENTS 205 INTEGRATED ANNUAL REPORT 2026 14. INCOME TAX (CONTINUED) Reconciliation between tax expense and accounting profit: The reconciliation between tax expense and profit before tax multiplied by the applicable tax rates for the financial years ended 31 January 2026 and 2025 were as follows: Group Company 2026 2025 2026 2025 RM million RM million RM million RM million Profit before tax 1,029 1,120 499 190 Tax at Malaysian statutory tax rate of 24% (2025: 24%) 247 269 120 46 Income not subject to tax (386) (443) (175) (88) Expenses not deductible for tax purposes 342 453 55 42 Different tax rates of subsidiaries in various national jurisdictions (16) (142) - - Changes in tax estimate - (704) - - Changes in deferred tax assets not recognised 5 116 - - Utilisation of previously unrecognised deferred tax assets (19) (11) - - Top-up tax expenses arising from Pillar Two legislation 62 80 - - Share of results of joint ventures and associates 79 5 - - Perpetual securities distribution and expenses (24) (32) - - Over provision of tax expense in prior years (14) (56) - (2) Income tax expense/(credit) recognised in profit or loss 276 (465) - (2) Domestic income tax is calculated at the Malaysian statutory tax rate of 24% (2025: 24%) of the estimated assessable profit for the financial year. Taxation for other jurisdictions are calculated at the rates prevailing in the respective jurisdictions. The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction. OECD Pillar Two model rules The Group is within the scope of the OECD Pillar Two model rules. Pillar Two legislation was enacted in Malaysia, the jurisdiction in which the Company is incorporated, and has come into effect for the current financial year. The Group applies the MFRS 112 exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes. Under the legislation, the Group is liable to pay a top-up tax for the difference between the Global Anti-Base Erosion rules effective tax rate for each jurisdiction and the 15% minimum rate in jurisdictions that have implemented Pillar Two legislation. The Group has performed an assessment of its exposure to Pillar Two income taxes for all the entities in the Group. As a result, the Group has recognised top-up tax expenses of RM62 million (2025: RM80 million), arising from the Group subsidiaries in the Netherlands with a permanent establishment in Brazil for the financial year ended 31 January 2026. The Group continues to follow Pillar Two legislative developments, as further countries enact the Pillar Two model rules, to evaluate the potential future impact on its consolidated results of operations, financial position and cash flows beginning 1 February 2026.
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