176 Notes to the Consolidated Financial Statements 31 December 2023 10. INCOME TAX EXPENSE (continued) During the year, the subsidiaries incorporated in China are subject to China income tax at the rate of 25% (2022: 25%). Taxes on estimated assessable profits elsewhere were calculated at the rates of taxation prevailing in the respective jurisdictions in which the Group operates. A reconciliation of the tax expense applicable to profit before tax using the applicable rate for the jurisdictions in which the Company and the majority of its subsidiaries are domiciled to the tax expense at the effective tax rates is as follows: 2023 2022 US$’000 US$’000 Profit before tax 394,238 815,125 Tax at the statutory tax rates 99,198 177,391 Losses/(profits) attributable to joint ventures and associates 5,595 (28,731) Income not subject to tax (29,908) (62,194) Non-deductible expenses 23,788 12,080 Effect of withholding tax 26,193 75,477 Unrecognised deductible temporary differences 220 5,066 Adjustment of current tax of previous periods (5,760) (3,302) Utilisation of tax losses not recognised in previous periods (692) (37) Tax losses not recognised 7,358 7,742 Previous period tax losses recognised in current period (112) (426) Others 302 950 Tax charge 126,182 184,016 During the year, the share of tax attributable to joint ventures and associates of US$5,595,000 (2022: US$28,731,000) is included in “Share of profits and losses of joint ventures and associates, net” in the consolidated statement of profit or loss and other comprehensive income. Pillar Two income taxes As stated in note 2.2(d), the Group has applied the mandatory exception to recognising and disclosing information about deferred tax assets and liabilities arising from Pillar Two income taxes, and will account for the Pillar Two income taxes as current tax when incurred. Pillar Two legislation has not been enacted in Singapore, the jurisdiction in which the Company is considered as tax resident. However, it has been announced that the rules on Pillar Two will come into effect from 1 January 2025. Under the legislation, ESR group is liable to pay a top-up tax for the difference between its Pillar Two effective tax rate per jurisdiction and the 15% minimum rate. Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions in which the Group operates, and the legislation will be effective for the Group’s financial year beginning 1 January 2024. Since the Pillar Two legislation is not effective at the reporting date, ESR group has no related current tax exposure. The Group is still in the process of assessing the potential exposure to Pillar Two income taxes. Potential exposure, if any, to Pillar Two income taxes is currently not known or reasonably estimable. STRENGTH IN UNITY
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