Income tax expense (Tables)

12 Months Ended

Dec. 31, 2022

The major components of income tax expense for the years ended December 31, 2020, 2021 and 2022 are as follows:


	31.12.2020			31.12.2021			31.12.2022			31.12.2022
	RMB’000			RMB’000			RMB’000			US$’000
Current income tax
- Current year		180,254			48,856			72,909			10,487
- (Over)/under provision in respect of prior years		(124	)		(21,523	)		27,406			3,942
Deferred tax
- Movement in temporary differences		12,543			16,483			(41,147	)		(5,918	)
- Over provision in respect of prior years		(135	)		—			(103	)		(15	)

Consolidated income tax expense reported in the statement of profit or loss		192,538			43,816			59,065			8,496

The reconciliation between

tax expense

and

the

product

accounting

profit

multiplied

by the PRC income tax rate of 15% (being tax rate of Yuchai) for the years ended December 31, 2020, 2021 and 2022 for the following reasons:


	31.12.2020			31.12.2021			31.12.2022			31.12.2022
	RMB’000			RMB’000			RMB’000			US$’000
Profit before tax		971,864			451,710			394,726			56,779
Income tax expense at 15%		145,780			67,757			59,209			8,517
Adjustments:
Non-deductible expenses		9,188			17,795			7,924			1,140
Tax-exempt income		(601	)		(2,181	)		(500	)		(72	)
Utilization of deferred tax benefits previously not recognized		(1,996	)		(29	)		(3,093	)		(445	)
Deferred tax benefits not recognized		6,097			10,356			22,606			3,252
Tax credits for research and development expense		(26,329	)		(59,633	)		(76,835	)		(11,052	)
Tax rate differential		24,251			16,517			10,901			1,568
(Over)/under provision in respect of previous years		(259	)		(21,523	)		27,303			3,927
Withholding tax expense		36,332			14,639			11,535			1,659
Others		75			118			15			2

Total		192,538			43,816			59,065			8,496

Deferred tax relates to the following:


	Consolidated statement of financial position									Consolidated statement of profit or loss
	31.12.2021			31.12.2022			31.12.2022			31.12.2020			31.12.2021			31.12.2022			31.12.2022
	RMB’000			RMB’000			US$’000			RMB’000			RMB’000			RMB’000			US$’000
Accelerated tax depreciation		(138,770	)		(122,298	)		(17,592	)		(55,882	)		(37,968	)		16,472			2,369
Interest receivable		(3,396	)		(3,033	)		(436	)		(293	)		(1,459	)		363			52
PRC withholding tax on dividend income (i)		(65,544	)		(61,825	)		(8,893	)		(36,255	)		(14,529	)		(11,458	)		(1,648	)
Effect of change in residual value an impairment of property, plant and equipment		65,368			69,641			10,018			33,456			25,264			4,273			615
Write-down of inventories		20,250			29,503			4,244			4,225			(2,378	)		9,253			1,331
Impairment losses on trade receivables		6,789			7,071			1,017			(2,021	)		(1,267	)		282			41
Accruals		283,427			234,586			33,744			48,149			(15,339	)		(48,841	)		(7,026	)
Deferred income		97,828			56,480			8,124			1,211			(11,114	)		(41,348	)		(5,948	)
Losses available for offsetting against future taxable income		23,072			139,747			20,102			—			23,072			116,675			16,783
Others		43,606			39,185			5,636			(4,998	)		19,235			(4,421	)		(636	)

Deferred tax (expenses)/benefits											(12,408	)		(16,483	)		41,250			5,933

Net deferred tax assets		332,630			389,057			55,964

Reflected in the consolidated statement of financial position as follows:
Deferred tax assets		398,174			450,882			64,857
Deferred tax liabilities		(65,544	)		(61,825	)		(8,893	)

		332,630			389,057			55,964

Note:

(i)

The movement of PRC withholding tax on dividend income is as follows:


	31.12.2021			31.12.2022			31.12.2022
	RMB’000			RMB’000			US$’000
At January 1		(112,456	)		(65,544	)		(9,428	)
Provision made to consolidated statement of profit or loss		(14,529	)		(11,458	)		(1,648	)
Utilization		61,441			15,177			2,183

December 31		(65,544	)		(61,825	)		(8,893	)

Deferred tax assets have not been recognized in respect of the following items:


	31.12.2021		31.12.2022		31.12.2022
	RMB’000		RMB’000		US$’000
Unutilized tax losses		414,212		473,456		68,105
Unutilized capital allowances and investment allowances		103,810		100,643		14,477
Other unrecognized temporary differences relating to asset impairment and deferred grants		199,203		142,851		20,548

		717,225		716,950		103,130