22. Tax matters
The components of current and deferred income tax expense (benefit) are as follows:
|
|
|
2017 |
|
2016 |
|
2015 |
|
|
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
Consolidated income statement |
|
|
|
|
|
|
|
Current income tax |
|
|
|
|
|
|
|
Current income tax charge/(credit) |
|
30,491 |
|
(14,885) |
|
42,544 |
|
Adjustments in current income tax in respect of prior years |
|
753 |
|
1,220 |
|
— |
|
Total |
|
31,244 |
|
(13,665) |
|
42,544 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax |
|
|
|
|
|
|
|
Origination and reversal of temporary differences |
|
(14,857) |
|
(33,030) |
|
7,398 |
|
Impact of tax rate changes |
|
(31,688) |
|
— |
|
— |
|
Adjustments in deferred tax in respect of prior years |
|
480 |
|
— |
|
— |
|
|
|
(46,065) |
|
(33,030) |
|
7,398 |
|
|
|
|
|
|
|
|
|
|
|
(14,821) |
|
(46,695) |
|
49,942 |
The Company has significant business operations in Spain, France, South Africa and the United States. The following is a reconciliation of a weighted blended statutory income tax rate to our effective tax rate for the years ended December 31, 2017, 2016, and 2015:
|
|
|
2017 |
|
2016 |
|
2015 |
|
|
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
Accounting profit/(loss) before income tax |
|
(20,643) |
|
(405,308) |
|
(8,530) |
|
At weighted effective tax rate of 31% (2016: 31% and 2015: 28%) |
|
(6,399) |
|
(125,645) |
|
(2,388) |
|
|
|
— |
|
— |
|
|
|
Other non-taxable income/(expenses) |
|
18,374 |
|
81,648 |
|
19,454 |
|
Movements in unprovided deferred tax |
|
7,138 |
|
15,326 |
|
35,754 |
|
US tax rate change |
|
(31,257) |
|
— |
|
— |
|
Differing territorial tax rates |
|
2 |
|
(22,949) |
|
4,859 |
|
Adjustments in respect of prior periods |
|
1,233 |
|
— |
|
— |
|
Other items |
|
(845) |
|
890 |
|
— |
|
Permanent differences |
|
(227) |
|
5,196 |
|
(4,799) |
|
Incentives and deductions |
|
(3,188) |
|
(1,161) |
|
(2,938) |
|
Total State, Local and Other taxes |
|
348 |
|
— |
|
— |
|
Income tax (expense)/benefit |
|
(14,821) |
|
(46,695) |
|
49,942 |
The Tax Cuts and Jobs Act (“TCJA”) was enacted into law on December 22, 2017. The material impact of the TCJA on the Company's 2017 position was a deferred tax credit of $31.2 million representing the remeasurement of the Company’s U.S. net deferred tax liability as a consequence of the reduction of the U.S. federal corporate statutory tax rate from 35% to 21% with effect from January 1, 2018. In addition, a one off tax charge of $1.7 million has been included representing the Company’s best estimate of its liability for the one-time transition tax imposed by the TCJA on certain of its historic non-U.S. earnings. Further work will be performed during 2018 to refine this estimate, but any change in the amount provided resulting from this work is not expected to be material. While the Company continues to evaluate the effect of the provisions that will impact 2018, noting that further guidance and regulations on the new legislation are expected to be released during the year, no other significant impacts of the change in law have been identified. Therefore in future periods the Company's effective tax rate is expected to decrease as a result of the reduction in the U.S. federal tax rate.
Deferred taxes
The changes in deferred tax assets and liabilities in 2017, 2016 and 2015 were as follows:
|
|
|
Deferred Tax |
|
Deferred Tax |
|
|
|
Assets |
|
Liabilities |
|
|
|
US$'000 |
|
US$'000 |
|
Balance at January 1, 2016 |
|
39,070 |
|
191,748 |
|
Increases |
|
27,920 |
|
9,150 |
|
Business combination (Note 5) |
|
337 |
|
— |
|
Decreases |
|
(21,056) |
|
(62,128) |
|
Exchange differences |
|
(1,321) |
|
765 |
|
Balance at December 31, 2016 |
|
44,950 |
|
139,535 |
|
Discontinued operations |
|
1,948 |
|
11,667 |
|
Increase |
|
10,805 |
|
14,643 |
|
Decrease |
|
(4,346) |
|
(47,665) |
|
Exchange differences |
|
2,491 |
|
(2,463) |
|
Balance at December 31, 2017 |
|
55,848 |
|
115,717 |
Significant components of the Company’s deferred tax assets and liabilities at December 31, 2017 and 2016 consist of the following:
|
|
|
2017 |
|
2016 |
|
|
|
US$'000 |
|
US$'000 |
|
Deferred tax assets: |
|
|
|
|
|
Non-current assets |
|
465 |
|
8,822 |
|
Provisions |
|
25,534 |
|
15,418 |
|
Depreciation and amortization charge |
|
6,598 |
|
807 |
|
Hedging instruments |
|
1,239 |
|
199 |
|
Tax losses, incentives, reductions and credits carryforwards |
|
20,723 |
|
19,391 |
|
Other |
|
1,289 |
|
313 |
|
Total |
|
55,848 |
|
44,950 |
|
Deferred tax liabilities: |
|
|
|
|
|
Non-current assets |
|
8,428 |
|
— |
|
Depreciation and amortization charge |
|
86,356 |
|
132,481 |
|
Inventories |
|
243 |
|
1,441 |
|
Other |
|
20,690 |
|
5,613 |
|
Total |
|
115,717 |
|
139,535 |
|
|
|
|
|
|
|
Net Total Deferred Tax Asset / (Liability) |
|
(59,869) |
|
(94,585) |
|
|
|
|
|
|
|
Presented in the statement of financial position as follows: |
|
|
|
|
|
Deferred tax assets |
|
5,273 |
|
44,950 |
|
Deferred tax liabilities |
|
65,142 |
|
139,535 |
|
|
|
|
|
|
|
Net Total Deferred Tax Asset / (Liability) |
|
(59,869) |
|
(94,585) |
Management of tax risks
The Company is committed to conducting its tax affairs consistent with the following objectives:
|
(i) |
to comply with relevant laws, rules, regulations, and reporting and disclosure requirements in whichever jurisdiction it operates; |
|
(ii) |
to maintain mutual trust, transparency and respect in its dealings with all tax authorities; and |
|
(iii) |
to adhere with best practice and comply with the Company's internal corporate governance procedures, including but not limited to its Code of Conduct |
In the jurisdictions in which the Company operates, tax returns cannot be deemed final until they have been audited by the tax authorities or until the statute-of-limitations has expired. The number of open tax years subject to examination varies depending on the tax jurisdiction. In general, the Company has the last four years open to review. The criteria that the tax authorities might adopt in relation to the years open for review could give rise to tax liabilities which cannot be quantified.