Notes to the consolidated annual financial statements l Note 7

  Rm   2016    2015   
7. Taxation          
7.1 Income tax expense          
  South African current tax     (5 045)    (4 721)   
      Current year     (5 038)    (4 721)   
      Adjustments in respect of prior years     (7)    –    
   Foreign current tax     (634)    (822)   
      Current year     (716)    (536)   
      Adjustments in respect of prior years     138     (99)   
      Withholding tax     (56)    (187)   
      Current year     (61)    (188)   
      Adjustments in respect of prior years     5     1    
   Total current tax     (5 679)    (5 543)   
   Deferred tax on origination and reversal of temporary differences:                
   South African deferred tax     (100)    42    
      Current year     (98)    5    
      Adjustments in respect of prior years     (2)    37    
   Foreign deferred tax     (155)    160    
      Current year     (12)    (107)   
      Adjustments in respect of prior years     (143)    267    
   Total deferred tax     (255)    202    
   Total income tax expense     (5 934)    (5 341)   
   Components of deferred tax charged to profit or loss                
   Capital allowances     (311)    416    
   Foreign exchange     61     4    
   Tax losses     –     (184)   
   Provisions and deferred income     106     (12)   
   Other     (111)    (22)   
         (255)    202    
   Factors affecting tax expense for the year                
   The table below discloses the differences between the expected income tax expense at the South African statutory tax rate and the Group’s total income tax expense:                
   Expected income tax expense on profit before tax at the South African statutory tax rate     (5 276)    (4 998)   
   Adjusted for:                
      Non-deductible operating expenditure     (229)    (154)   
      Non-deductible finance costs     (106)    (180)   
      Non-deductible depreciation and amortisation     (46)    (41)   
      Unrecognised tax asset     (187)    (160)   
      Irrecoverable foreign taxes     (13)    (115)   
      Effect of taxation of associate and joint venture reported within operating profit     (70)    (45)   
      Minimum alternative taxes     (59)    (43)   
      Adjustments in respect of prior years     (9)    206    
      Effect of different statutory tax rates of jurisdictions other than South Africa     49     87    
      Non-taxable income     12     102    
   Total income tax expense     (5 934)    (5 341)   

  The South African statutory tax rate is 28.0% for all reporting periods. The Group’s effective tax rate is 31.5% (2015: 29.9%) the increase was mainly due prior year adjustments in 2015.

  Rm   2016    2015   
7.2 Other comprehensive income, net of tax                
   Foreign currency translation differences, net of tax     260     279    
      Foreign currency translation differences     418     379    
      Taxation     (158)    (100)   
   Gain/(Loss) on hedging instruments in cash flow hedges, net of tax     4     (1)   
      Gain/(Loss) on hedging instruments in cash flow hedges     3     (1)   
      Taxation     1     –    
   Other comprehensive income, net of tax     264     278    
7.3  Tax credited charged directly to other comprehensive income                
   Deferred tax     (157)    (100)   
         (157)    (100)   
7.4  Deferred tax                
   Analysed in the statement of financial position, after offset of balances within companies, as follows:                
      Deferred tax assets     25     18    
      Deferred tax liabilities     (2 272)    (1 758)   
         (2 247)    (1 740)   
   Components                
   Gross deferred tax assets and liabilities, before offset of balances within companies, are as follows:                
   Capital allowances     (3 071)    (2 593)   
      Deferred tax liabilities     (3 071)    (2 593)   
   Foreign exchange     (235)    (184)   
      Deferred tax assets     107     29    
      Deferred tax liabilities     (342)    (213)   
   Tax losses     2     –    
      Deferred tax assets     2     –    
   Provisions and deferred income     1 264     1 157    
      Deferred tax assets     1 266     1 157    
      Deferred tax liabilities     (2)    –    
   Other     (207)    (120)   
      Deferred taxation assets     17     9    
      Deferred taxation liabilities     (224)    (129)   
         (2 247)    (1 740)   
   Reconciliation of net deferred tax balance                 
   1 April     (1 740)    (1 570)   
      Foreign currency translation differences     27     1    
      Credited/(charged) to profit or loss     (255)    202    
      Charged directly to other comprehensive income     (157)    (100)   
      (Charged)/credited directly to equity     14     (36)   
      Business combinations and disposal of subsidiaries     (136)    (237)   
   31 March     (2 247)    (1 740)   
7.5  Factors affecting the tax charge in future years                
   Total estimated tax losses     3 169     2 268    
   Utilised to reduce net temporary differences     (6)    –    
   Estimated unused tax losses     3 163     2 268    
   Tax credits     –     –    
 

If the estimated unused tax losses are applied, the available R1 002 million (2015: R726 million) would result in the current year’s R2 247 million net deferred tax liability reducing to R1 245 million (2015: R1 740 million net deferred tax liability reducing to R1 014 million), if sufficient future taxable profits will be available against which the unused tax losses can be utilised.

The gross amounts and expiry dates of deductible temporary differences, estimated unused tax losses and unused tax credits, for which no deferred tax asset is recognised, are as follows:

  Rm 2 – 5 years Unlimited   Total  
  2016          
  Deductible temporary differences 2 3 650   3 652  
  Estimated unused tax losses1 211 2 952   3 163  
  Unused tax credits – –   –  
  2015          
  Deductible temporary differences 1 3 082   3 083  
  Estimated unused tax losses 111 2 157   2 268  
  Unused tax credits – –   –  
  Note:
  1. Effective 1 January 2016 the utilisation of tax losses of Vodacom Congo (RDC) SA are limited to 60% of the taxable income for years of assessment ending on or after 31 December 2016.