Annual Report 2021

CHINA MERCHANTS PORT HOLDINGS COMPANY LIMITED 136 Notes to the Consolidated Financial Statements For the year ended 31 December 2021 11. FINANCE INCOME AND COSTS 2021 2020 HK$’million HK$’million Finance income from: Interest income from bank and other deposits 123 80 Interest income from advance to a joint venture 77 69 Interest income from advances to associates 200 149 400 298 Interest expense on: Bank loans (312) (474) Notes payable (1,219) (1,215) Loans from: – a non-controlling equity holder of a subsidiary (23) (21) – fellow subsidiaries (16) (23) – immediate holding company (47) (22) Lease liabilities (50) (54) Others (179) (54) Total borrowing costs incurred (1,846) (1,863) Less: amount capitalised on qualifying assets (Note) 31 41 Finance costs (1,815) (1,822) Finance costs, net (1,415) (1,524) Note: Apart from the interest expenses incurred on borrowings specifically for the purposes of obtaining qualifying assets, those incurred from the general borrowing pool used for the purpose of obtaining qualifying assets are also capitalised in the consolidated statement of financial position. Capitalisation rate of 3.87% per annum (2020: 4.21% per annum) was applied, representing the weighted average rate of the costs of borrowings used to finance the qualifying assets. 12. TAXATION Hong Kong Profits Tax has been provided for at the rate of 16.5% (2020: 16.5%) on the estimated assessable profit for the year. The Group’s operations in Mainland China are subject to corporate income tax law of the PRC (“PRC corporate income tax”). The standard PRC corporate income tax rate is 25%. Certain of the Group’s subsidiaries enjoy the preferential tax rate of 15% upon the fulfilment of the criteria of the PRC tax laws. Further, 10% withholding income tax is generally imposed on dividends relating to any profits earned commencing from 2008 to foreign investors, while for some PRC entities held by companies incorporated in certain places, including Hong Kong and Singapore, preferential tax rate of 5% will be applied according to the PRC tax regulations if such companies are the beneficial owner of over 25% of these PRC entities. Taxation outside of Hong Kong and Mainland China has been calculated on the estimated assessable profit for the year at the rates of taxation prevailing in the countries in which the Group operates. Certain of the Group’s overseas subsidiaries are exempted from the corporate income tax in the relevant countries.