ESR AR 2019 EN

Notes to the Consolidated Financial Statements 31 December 2019 201 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ESR Annual Report 2019 29. DEFERRED TAX (continued) In accordance with PRC laws and regulations, tax losses could be carried forward for five years to offset against future taxable profits. Deferred tax assets relating to unutilised tax losses are recognised to the extent that it is probable that sufficient taxable profit will be available to allow such deferred tax assets to be utilised. The Group had unused tax losses available for offsetting against future profits in respect of certain subsidiaries of USD20,971,000 as at 31 December 2019 (2018: USD13,626,000), and the deferred tax assets have not been recognised. No deferred tax assets have been recognised in respect of these losses due to the unpredictability of future available taxable profit of the subsidiaries to offset against the unused tax losses. The available period of the unused tax losses will expire in one to five years for offsetting against future taxable profits. Pursuant to PRC Corporate Income Tax Law, a 10%withholding tax is levied on dividends declared to foreign investors from the foreign investment enterprises established in PRC. The requirement becomes effective on 1 January 2008 and applies to earnings after 31 December 2007. A lower withholding tax rate may be applied if there is a tax treaty between PRC and the jurisdiction of the foreign investors. The Group is therefore liable to withholding taxes on dividends distributed by its subsidiaries, joint ventures and associates established in PRC in respect of earnings generated from 1 January 2008. At 31 December 2019, no deferred tax (2018: nil) has been recognised for withholding taxes that would be payable on the unremitted earnings that are subject to withholding taxes of the Group’s subsidiaries established in PRC and Group’s investment in joint ventures. In the opinion of the directors, it is not probable that these subsidiaries and investments in joint ventures will distribute such earnings in the foreseeable future. The aggregate amounts of temporary differences associated with investments in subsidiaries in PRC for which deferred tax liabilities have not been recognised totaled approximately USD11,758,000 at 31 December 2019 (2018: USD3,766,000).