Annual Report 2020

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2020 92 The United Laboratories International Holdings Limited Annual Report 2020 11. TAX EXPENSE 2020 2019 RMB’000 RMB’000 The tax charge (credit) comprises: Current tax PRC Enterprise Income Tax (“EIT”) 166,601 209,209 PRC withholding tax on distributed profits of PRC subsidiaries – 32,500 166,601 241,709 Underprovision in prior year Hong Kong Profit tax – (3,067) PRC Enterprise Income Tax – 3,397 – 330 Deferred tax charge (credit) (Note 31) 14,815 (42,151) 181,416 199,888 Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profits for both years. On 21 March 2018, the Hong Kong Legislative Council passed The Inland Revenue (Amendment) (No. 7) Bill 2017 (the “Bill”) which introduces the two-tiered profits tax rates regime. The Bill was signed into law on 28 March 2018 and was gazetted on the following day. Under the two-tiered profits tax rates regime, the first HK$2 million of profits of qualifying corporations will be taxed at 8.25%, and profits above HK$2 million will be taxed at 16.5%, which only one entity nominated by a group of “connected” entities will be entitled to select the lower tax rate. The profits of Group entities not entitled to the two-tiered profits tax rates regime will continue to be taxed at a flat rate of 16.5%. The two-tiered profits tax rates regime are applicable to the Hong Kong subsidiaries for its annual reporting periods beginning on or after 1 January 2018. No Hong Kong Profits Tax has been recognised as its subsidiaries incorporated in Hong Kong had no assessable profits for both years. PRC EIT is calculated at the applicable rates of tax prevailing in the areas in which the Group operates, based on the existing legislation, interpretations and practices.