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Note 16 - Tax Expense

12 Months Ended

Dec. 31, 2022

16	Tax expense

	2022			2021			2020
Tax recognised in profit or loss

Current tax		9,932			9,051			9,492
Income tax - current year		8,707			8,769			8,969
Income tax - change in tax estimates		(46	)		(168	)		(54	)
Withholding tax - current year		1,271			450			577

Deferred tax expense		6,838			5,806			5,681
Origination and reversal of temporary differences		6,838			5,806			5,681

Tax expense – recognised in profit or loss		16,770			14,857			15,173

Tax recognised in other comprehensive income
Income tax - current year		-			-			-

Tax expense		16,770			14,857			15,173

Unrecognised deferred tax assets

	2022		2021		2020

Caledonia Holdings Zimbabwe (Private) Limited		1,800		1,800		593
Greenstone Management Services Holdings Limited		691		516		376
Tax losses carried forward		2,491		2,316		969

Taxable losses do not expire for the entities incurring taxable losses within the Group, unless the entities cease trading. Income tax losses carried forward relate to Caledonia Holdings Zimbabwe (Private) Limited and Capital losses relate to Greenstone Management Services Holdings Limited (UK). 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	2022			2021			2020

Net income tax payable at January 1		(1,461	)		(419	)		(163	)
Current tax expense		(9,932	)		(9,051	)		(9,492	)
Foreign currency movement		3,244			583			2,580
Tax paid		6,866			7,426			6,656
Net income tax payable at December 31		(1,284	)		(1,461	)		(419	)

Reconciliation of tax rate	2022			2021			2020

Profit for the year		22,866			23,142			25,257
Total tax expense		16,770			14,857			15,173
Profit before tax		39,636			37,999			40,430

Income tax at Company's domestic tax rate ⁽¹⁾		-			-			-
Tax rate blended in foreign jurisdictions ⁽²⁾		12,600			11,847			12,405
Effect of income tax calculated in RTGS$ as required by PN26 ⁽³⁾		713			590			2,004
Management fee – withholding tax on deemed dividend portion		247			342			209
Management fee – non-deductible deemed dividend		735			611			570
Management fee – withholding tax - current year		174			148			123
Withholding tax on intercompany dividends		850			-			245
Non-deductible expenditure
- CSR donations		269			311			107
- Other non-deductible expenditure		656			30			57
- IMTT ⁽⁴⁾		398			(200	)		120
Credit export incentive income exemption		-			-			(598	)
Change in income tax rate ⁽⁵⁾		(8	)		-			(287	)
Change in tax estimates
- Zimbabwean income tax		-			(166	)		-
- South African income tax		(38	)		(2	)		(54	)
Change in unrecognised deferred tax losses		174			1,346			272
Tax expense - recognised in profit or loss		16,770			14,857			15,173

⁽¹⁾

The tax rate in Jersey, Channel Islands is 0% (2021: 0%, 2020: 0%).

⁽²⁾

The effective tax rate of 35.36% (2021: 39.10%) exceeds the statutory tax rates of subsidiaries of the Company, as certain expenditures are incurred by the Company that is not tax-deductible against taxable income in Zimbabwe and South Africa, where the enacted tax rates are 24.72% (2021: 24.72%, 2020: 25.75%) and 28.00% (2021: 28.00%, 2020: 28.00%) respectively. Further, Zimbabwean legislation requires the Blanket income taxation calculation to be performed in RTGS$ whereas the functional currency in which the profit before tax is calculated in these consolidated financial statements is in US Dollar; the requirement is further described in point 3 below.

⁽³⁾

In 2019 ZIMRA issued PN26 that was affected retrospectively from February 22, 2019. The public notice provided clarity on Section 4 (a) of the Finance Act [Chapter 23.04] of Zimbabwe, which requires a company earning taxable income to pay tax in the same or other specified currency in which taxable income and revenue is earned. PN 26 clarifies that the calculation of taxable income be performed in RTGS$ and that the payment of the tax be in the ratio of the currency that the taxable income and revenue is earned. The reconciling item reconciles the profit before tax calculated using US Dollars as the functional currency of the Zimbabwean entities to taxable income calculated in RTGS$.

⁽⁴⁾

The presidential announcement made on May 7, 2022 to increase the IMTT charges on all domestic foreign currency transfers from 2% to 4%.

⁽⁵⁾

The South African Government announced in the 2021 National Budget Statement that the income tax rate will be reduced from 28.00% to 27.00% and will take effect for the years of assessment ending on March 31, 2023. This resulted in a change in estimate on the deferred tax asset calculation.

Recognised deferred tax assets and liabilities

	Assets					Liabilities						Net
	2022			2021		2022			2021			2022			2021
Property, plant and equipment		-			-		(6,323	)		(9,328	)		(6,323	)		(9,328	)
Exploration and evaluation assets		-			-		(2	)		-			(2	)		-
Allowance for obsolete stock		(163	)		-		-			(47	)		(163	)		(47	)
Prepayments		-			3		(5	)		-			(5	)		3
Unrealised foreign exchange		733			-		-			(10	)		733			(10	)
Trade and other payables		814			499		-			-			814			499
Cash-settled share-based payments		-			989		-			-			-			989
Provisions		25			-		-			-			25			-
Other		-			54		-			-			-			54
Tax assets/ (liabilities)		1,409			1,545		(6,330	)		(9,385	)		*(4,921	)		*(7,840	)

The net deferred tax liability consists of a deferred tax asset of $202 (2021: $194) from the South African operation and a net deferred tax liability of $5,123 (2021: $8,034) due to the Blanket Mine operation. The amounts are in different tax jurisdictions and cannot be offset. The amounts are presented as part of Non-current assets and 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, 2022			Recognised in profit or loss			Foreign exchange movement			Balance December 31, 2022
Property, plant and equipment		(9,328	)		(8,560	)		11,565			(6,323	)
Exploration and evaluation assets		(47	)		10			35			(2	)
Allowance for obsolete stock		3			(295	)		129			(163	)
Prepayments		(10	)		4			1			(5	)
Unrealised foreign exchange		499			1,179			(945	)		733
Trade and other payables		989			794			(969	)		814
Provisions		54			30			(59	)		25
Tax (liabilities)/ assets		(7,840	)		(6,838	)		9,757			(4,921	)

	Balance January 1, 2021			Recognised in profit or loss			Foreign exchange movement			Balance December 31, 2021
Property, plant and equipment		(5,380	)		(6,439	)		2,491			(9,328	)
Exploration and evaluation assets		(29	)		(31	)		13			(47	)
Allowance for obsolete stock		13			3			(13	)		3
Prepayments		(3	)		(8	)		1			(10	)
Unrealised foreign exchange		530			344			(375	)		499
Trade and other payables		639			235			115			989
Cash-settled share-based payments		8			(8	)		-			-
Provisions		60			123			(129	)		54
Other		15			(25	)		10			-
Tax (liabilities)/ assets		(4,147	)		(5,806	)		2,103			(7,840	)