Income tax expense (Tables)

12 Months Ended

Dec. 31, 2023

The major components of income tax expense for the years ended December 31, 2021, 2022 and 2023 are as follows:


	31.12.2021			31.12.2022			31.12.2023			31.12.2023
	RMB’000			RMB’000			RMB’000			US$’000
Current income tax
- Current year		48,856			72,909			81,365			11,454
- (Over)/under provision in respect of prior years		(21,523	)		27,406			27,837			3,919
Deferred tax
- Movement in temporary differences		16,483			(41,147	)		(14,837	)		(2,089	)
- (Over)/under provision in respect of prior years		—			(103	)		54,131			7,620

Consolidated income tax expense reported in the statement of profit or loss		43,816			59,065			148,496			20,904

Reconciliation of Income Tax Expense

The reconciliation between tax expense and the product of accounting profit multiplied by the PRC income tax rate of 15% (being tax rate of Yuchai) for the years ended December 31, 2021, 2022 and 2023 for the following reasons:


	31.12.2021			31.12.2022			31.12.2023			31.12.2023
	RMB’000			RMB’000			RMB’000			US$’000
Profit before tax		451,710			394,726			571,352			80,431
Income tax expense at 15%		67,757			59,209			85,703			12,064
Adjustments:
Non-deductible expenses		17,795			7,924			5,888			829
Tax-exempt income		(2,181	)		(500	)		(11,993	)		(1,688	)
Utilization of deferred tax benefits previously not recognized		(29	)		(3,093	)		(6,211	)		(874	)
Deferred tax benefits not recognized		10,356			22,606			42,830			6,029
Tax credits for research and development expense		(59,633	)		(76,835	)		(85,372	)		(12,018	)
Tax rate differential		16,517			10,901			21,542			3,032
(Over)/under provision in respect of previous years		(21,523	)		27,303			81,968			11,539
Withholding tax expense		14,639			11,535			14,872			2,094
Others		118			15			(731	)		(103	)

Total		43,816			59,065			148,496			20,904

Summary of Deferred Tax

Deferred tax relates to the following:


	Consolidated statement of financial position									Consolidated statement of profit or loss
	31.12.2022			31.12.2023			31.12.2023			31.12.2021			31.12.2022			31.12.2023			31.12.2023
	RMB’000			RMB’000			US$’000			RMB’000			RMB’000			RMB’000			US$’000
Accelerated tax depreciation		(122,298	)		(77,806	)		(10,953	)		(37,968	)		16,472			44,492			6,263
Interest receivable		(3,033	)		—			—			(1,459	)		363			3,033			427
PRC withholding tax on dividend income ( i )		(61,825	)		(64,717	)		(9,110	)		(14,529	)		(11,458	)		(14,457	)		(2,035	)
Effect of change in residual value an d impairment of property, plant and equipment		69,641			2,866			404			25,264			4,273			(66,774	)		(9,400	)
Write-down of inventories		29,503			37,120			5,226			(2,378	)		9,253			7,617			1,072
Impairment losses on trade receivables		7,071			7,426			1,045			(1,267	)		282			355			50
Accruals		234,586			232,048			32,666			(15,339	)		(48,841	)		(2,505	)		(352	)
Deferred income		56,480			79,896			11,247			(11,114	)		(41,348	)		23,416			3,296
Losses available for offsetting against future taxable income		139,747			112,601			15,851			23,072			116,675			(27,146	)		(3,821	)
Others		39,185			31,854			4,484			19,235			(4,421	)		(7,325	)		(1,031	)

Deferred tax (expenses)/benefits											(16,483	)		41,250			(39,294	)		(5,531	)

Net deferred tax assets		389,057			361,288			50,860

Reflected in the consolidated statement of financial position as follows:
Deferred tax assets		450,882			426,377			60,023
Deferred tax liabilities		(61,825	)		(65,089	)		(9,163	)

		389,057			361,288			50,860

Note:

(i)

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


	31.12.2022			31.12.2023			31.12.2023
	RMB’000			RMB’000			US$’000
At January 1		(65,544	)		(61,825	)		(8,703	)
Provision made to consolidated statement of profit or loss		(11,458	)		(14,457	)		(2,035	)
Utilization		15,177			11,565			1,628

December 31		(61,825	)		(64,717	)		(9,110	)

Deferred Tax Assets That Have Not Been Recognized

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


	31.12.2022		31.12.2023		31.12.2023
	RMB’000		RMB’000		US$’000
Unutilized tax losses		473,456		628,534		88,481
Unutilized capital allowances and investment allowances		100,643		94,447		13,296
Other unrecognized temporary differences relating to asset impairment and deferred grants		142,851		156,226		21,993

		716,950		879,207		123,770