Annual Report 2023

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2023 93 The United Laboratories International Holdings Limited Annual Report 2023 11. TAX EXPENSE 2023 2022 RMB’000 RMB’000 The tax charge comprises: Current tax Hong Kong Profits tax 1,547 – PRC Enterprise Income Tax (“EIT”) 499,827 332,625 PRC withholding tax on interest income 5,908 7,316 PRC withholding tax on royalty income 79 – PRC withholding tax on distributed profits of PRC subsidiaries 42,701 61,290 550,062 401,231 Deferred tax charge (Note 30) 93,241 24,512 643,303 425,743 Taxation arising in other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions. Hong Kong Profits Tax is calculated at 16.5% of the estimated 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 2023 and 2022. According to a joint circular of Ministry of Finance and State Administration of Taxation, Cai Shui 2008 No.1, dividend distributed out of the profits generated since 1 January 2008 by a PRC entity to a non-PRC tax resident shall be subject to the PRC EIT pursuant to Articles 3 and 27 of the Income Tax Law Concerning Foreign Investment Enterprises and Foreign Enterprises and Article 91 of the Detailed Rules for the Implementation of the Income Tax Law for Enterprises with Foreign Investment and Foreign Enterprises. The withholding tax rate applicable to the Group is 5%. As at 31 December 2023 and 2022, deferred tax was provided for in full in respect of the temporary differences attributable to such profits.