17	Tax expense

	2019		2018			2017
Tax recognised in profit or loss

Current tax		7,311		3,783			4,995
Income tax– current year		6,802		2,523			3,702
Income tax – Prior year under provision		29		1,075			71
Withholding tax expense – current year		480		580			1,222
Withholding tax expense – Prior year over provision		-		(395	)		-
Deferred tax expense		2,979		3,662			3,696
Origination and reversal of temporary differences		2,979		3,662			3,696

Tax expense – recognised in profit or loss		10,290		7,445			8,691

Tax recognised in other comprehensive income

Income tax - current year		-				-				-
Tax expense			10,290				7,445				8,691

Unrecognised deferred tax assets

	2019		2018		2017

Eersteling Gold Mining Company Limited		-		4,989		4,989
Caledonia Holdings Zimbabwe (Private) Limited		421		-		-
Greenstone Management Services Holdings Limited		276		191		116
Tax losses carried forward		697		5,180		5,105

Taxable losses do

not

expire for the entities incurring taxable losses within the Group. Tax losses carried forward relate to Greenstone Management Services Holdings Limited (UK) and Caledonia Holdings Zimbabwe (Private) Limited. Unrecognised tax losses of Eersteling Gold Mining Company Limited amounted to

for

2019

and the unrecognised tax losses relating to the entity were transferred with the sale of the entity. Deferred tax assets have

not

been recognised in these entities as future taxable income is

not

deemed probable to utilise these losses against.

Tax paid	2019			2018			2017

Net income tax payable at January 1		(1,538	)		(1,145	)		(345	)
Current tax expense		(7,310	)		(3,783	)		(4,995	)
Foreign currency movement		3,168			46			(17	)
Tax paid		5,517			3,344			4,212
Net income tax payable at December 31		(163	)		(1,538	)		(1,145	)

Reconciliation of tax rate

	2019			2018			2017
Profit for the year		50,401			13,756			11,896
Total tax expense		10,290			7,445			8,691
Profit before tax		60,691			21,201			20,587

Income tax at Company's domestic tax rate (1)		-			-			-
Tax rate differences in foreign jurisdictions (2)		16,232			6,465			6,546
Effect of income tax calculated in RTGS$ as required by PN26 (3)		(8,526	)		-			-
Management fee – Withholding tax on deemed dividend portion (4)		224			337			538
Management fee – non-deductible deemed dividend (4)		652			579			925
Management fee – withholding tax current year		129			96			427
Management fee – non-deductible withholding tax prior year (5)		-			(664	)		-
Withholding tax on intercompany dividend		128			110			90
Non-deductible royalty expenses		933			882			901
Other non-deductible expenditure		39			137			107
Export incentive income credit relating to 2016		-			-			(284	)
Export incentive income exemption (6)		(124	)		(1,649	)		(630	)
Change in tax estimates
- Zimbabwean income tax (7)		29			795			-
- South African income tax		63			220			-
- Other		-			61			(45	)
Change in unrecognised deferred tax assets		511			76			116
Tax expense - recognised in profit or loss		10,290			7,445			8,691

(

)

Enacted tax rate in Jersey, Channel Islands is

(

2018:

0%;

2017:

)

(

)

Subsidiaries registered in Zimbabwe and South Africa are subject to a corporate tax rate of

25,75%

and

28%

respectively.

(

)

2019

ZIMRA issued

PN26

that was effected retrospectively from

February 22, 2019.

The public notice provided clarity on Section

(a) of the Finance Act [Chapter

23.04]

of Zimbabwe, that requires a company earning taxable income to pay tax in the same or other specified currency that the income is earned. PN

clarifies that the calculation of taxable income be performed in RTGS$ and that the payment of the tax be paid in the ratio of the currency that the turnover is earned. The reconciliating item reconciles the profit before tax calculated using US Dollars as the functional currency of the Zimbabwean entities to taxable income calculated in RTGS$.

(

)

Zimbabwean tax legislation changed during

2017

that gave rise to an additional withholding tax of

15%

going forward on a portion of the intercompany management fee considered to be a deemed dividend. The new legislation resulted in this portion of the management fee being

not

deductible for income tax purposes in Zimbabwe from

January 1, 2017.

(

)

Withholding tax on the management fee was provided for and paid at

15%

2017.

However, in the

second

quarter of

2018

management obtained confirmation from the ZIMRA that the withholding tax rate was reduced to

from

February 1, 2017.

The ZIMRA allowed an amount of

$395

to be offset against outstanding income tax liabilities in Zimbabwe.

The overpayment of withholding taxes on the management fee also resulted in a change of estimate reducing the

2017

non-deductible withholding tax in the South African subsidiary amounting to

$269,

estimated at

15%,

5%.

The change in estimate was accounted for prospectively in the

2018

year.

(

)

March 23, 2018,

the ZIMRA enacted a new finance act that provided for the export credit incentive to be tax exempt. The

2018

finance bill indicated that the export incentive income will be tax exempt from

June 1, 2017.

The new finance bill resulted in an income tax credit being applied in the

2018

income tax calculation giving rise to a credit for the export incentive income of

2017.

(

)

During the

second

quarter of

2018

management revised its estimated management fee fair value previously deducted against taxable income in the prior years. Management approached ZIMRA and reached a settlement on the amount allowed as a deduction.

penalties or interests were incurred.

Recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

	Assets				Liabilities						Net
	2019		2018		2019			2018			*2019			*2018

Property, plant and equipment		-		-		(4,195	)		(24,930	)		(4,195	)		(24,930	)
Allowance for obsolete stock		22		258					-			22			258
Prepayments		-		-		(4	)		(3	)		(4	)		(3	)
Unrealised foreign exchange		309		34		-			-			309			34
Trade and other payables		739		-		-			-			739			-
Share based payments		5		13		-			-			5			13
Provisions		58		1,386		-			-			58			1,386
Other		-		12		-			-			-			12
Tax assets/ (liabilities)		1,133		1,703		(4,199	)		(24,933	)		(3,066	)		(23,230	)

The deferred tax liability consists of a deferred tax asset of

$63

(

2018:

$98

) from the South African operation and a net deferred tax liability of

$3,129

(

2018:

$23,328

) due to the Zimbabwean operation. The amounts are in different tax jurisdictions and cannot be offset. The amounts are presented as part of Non-current assets and a Non-current liabilities in the Statements of financial position. The deferred tax asset recognised is supported by evidence of probable future taxable income.

Movement in recognised deferred tax assets and liabilities

	Balance January 1, 2019			Recognised in profit or loss			Foreign exchange movement			Balance December 31, 2019
Property, plant and equipment		(24,930	)		(4,561	)		25,296			(4,195	)
Allowance for obsolete stock		258			11			(247	)		22
Prepayments		(3	)		-			(1	)		(4	)
Unrealised foreign exchange		34			519			(244	)		309
Trade and other payables		486			1,093			(840	)		739
Share based payments		13			(9	)		1			5
Provisions		852			11			(805	)		58
Other		60			(43	)		(17	)		-
Total		(23,230	)		(2,979	)		23,143			(3,066	)

	Balance January 1, 2018			Recognised in profit or loss			Foreign exchange movement			Balance December 31, 2018
Property, plant and equipment		(20,985	)		(3,945	)		-			(24,930	)
Allowance for obsolete stock		35			223			-			258
Prepayments		(4	)		-			1			(3	)
Unrealised foreign exchange		97			(63	)		-			34
Trade and other payables		429			57			-			486
Share based payments		12			3			(2	)		13
Provisions		813			47			(8	)		852
Other		48			16			(4	)		60
Total		(19,555	)		(3,662	)		(13	)		(23,230	)