Serba Dinamik Annual Report 2019

290 2019 ANNUAL REPORT FINANCIAL STATEMENTS SERBA DINAMIK HOLDINGS BERHAD N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 24. TAX EXPENSE (CONTINUED) Reconciliation of tax expense Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 Profit after tax 497,983 392,842 140,224 111,238 Total tax expense 46,845 44,783 6,854 2,687 Profit excluding tax 544,828 437,625 147,078 113,925 ========== ========== ========== ========= Income tax calculated using Malaysian tax rate of 24% 130,342 105,030 35,299 27,342 Tax exempt income - - ( 33,943) ( 25,728) Effect of lower tax under Labuan Business Activity Tax * - ( 82,663) - - Effect of tax rate in foreign jurisdictions ( 96) ( 180) - - Non-deductible expenses 50,289 18,620 2,691 ( 846) Profit of foreign source not subject to Malaysian tax ( 137,507) ( 4,039) - - 43,028 36,768 4,047 768 ------------ ------------ ------------ ----------- Under provision in prior year 3,817 8,015 2,807 1,919 Total tax expense 46,845 44,783 6,854 2,687 ========== ========== ========== ========= * The Group has a few Labuan companies which are governed under Labuan Business Activity Act 1990 (“LBATA”). Based on Labuan Business Activity Tax (Amendment) Bill 2019 and clarification from Certified Tax Institute of Malaysia (“CTIM”) through its memorandum on issues arising from Labuan Business Activity Tax (Amendment) Bill 2019 dated 18 December 2019, Labuan business activity which is not listed in the amended regulations will be taxed under the Income Tax Act 1967. As a result of this, some of the group’s Labuan companies that are not listed in the amended regulations will be taxed under the Income Tax Act 1967. In prior year, Lembaga Hasil Dalam Negeri (“LHDN”) has conducted tax investigation on two subsidiaries of the Group in relation to Year of Assessment 2010 to 2015. The tax investigation has been settled subsequent to year end, with total tax settlement of RM45 million, of which constitute additional tax payable of RM29 million and tax penalty of RM16 million. As at 31 December 2019, the tax payment for the additional tax payable and tax penalty has been fully settled.