Annual Report 2021

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2021 96 The United Laboratories International Holdings Limited Annual Report 2021 11. TAX EXPENSE 2021 2020 RMB’000 RMB’000 The tax charge comprises: Current tax PRC Enterprise Income Tax (“EIT”) 151,371 157,348 PRC withholding tax on interest income 4,536 9,253 PRC withholding tax on distributed profits of PRC subsidiaries 8,957 – 164,864 166,601 Deferred tax charge (Note 30) 48,198 14,815 213,062 181,416 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. Pursuant to the PRC EIT law and its detailed implementation rules promulgated on 16 March 2007 and 6 December 2007, respectively, the tax rate for domestic and foreign enterprises is unified at 25% and is effective from 1 January 2008. Besides, with effect from 1 January 2008, if the subsidiaries are qualified as high-technology companies (under the new PRC EIT law), the subsidiaries are entitled to a reduced rate of 15% and such qualification is subject to renewal for every three years. Certain of group entities in the PRC are entitled to the reduced tax rate of 15% for 2021 and 2020.