The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as
reported in the profit and loss account because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the
reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are
recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax
liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference
arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects
neither the tax profit nor the accounting profit.