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Axiata Group Berhad | Annual Report 2016
FINANCIAL STATEMENTS
144
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016
3.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(n) Current and deferred tax (continued)
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period
in the countries where the Company and its subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the amounts attributed to assets and
liabilities for tax purposes and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they
arise from the initial recognition of goodwill. Deferred tax is also not accounted for if it arises from initial recognition of an asset or liability in a
transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred
tax is determined using tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period and are
expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, unused tax losses or unused tax credits can be utilised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred tax liability where
the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not be
reversed in the foreseeable future. Generally the Group is unable to control the reversal of the temporary difference for associates. Only where
there is an agreement in place that gives the Group the ability to control the reversal of the temporary difference not recognised.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities
and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same
taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Tax benefit from investment tax incentive is recognised when the tax credit is utilised and no deferred tax asset is recognised when the tax
credit is claimed.
(o) Provisions
Provisions are recognised when the Group and the Company have a present legal or constructive obligation as a result of past events, when
it is probable that an outflow of resources will be required to settle the obligation, and when a reliable estimate of the amount can be made.
Where the Group and the Company expect a provision to be reimbursed (for example, under an insurance contract), the reimbursement is
recognised as a separate asset but only when the reimbursement is virtually certain. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in a settlement is determined by considering
the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the
same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that
reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to
passage of time is recognised as finance cost.
Provision for liabilities is mainly provisions for dismantling, removal or restoration on identified sites. Provisions are reviewed at the end of
the reporting period and adjusted to PPE to reflect the current best estimation. Where the time value of money is material, the amount of a
provision is the present value of the future period expenditure expected to be required to settle the obligation.
(p) Contingent liabilities and contingent assets
The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingent liability is a possible
obligation that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the Group or a
present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A
contingent liability also arises in the extremely rare circumstance where there is a liability that cannot be recognised because it cannot be
measured reliably.