BIMB Integrated Annual Report 2017

40. TAX EXPENSE (CONTINUED) A reconciliation of effective tax expense for the Group and Company are as follows: GROUP COMPANY 2017 2016 2017 2016 RM’000 RM’000 RM’000 RM’000 Profit before tax 948,330 869,201 247,397 221,826 Income tax calculated using Malaysian tax rate of 24% 227,599 208,608 59,375 53,238 Non-deductible expenses 65,114 48,956 3,446 3,285 Non-deductible Sukuk’s finance cost 18,444 17,714 18,444 17,714 Non-taxable income (80,778) (41,420) (79,330) (71,836) Derecognition of deferred tax assets 12,000 – – – 242,379 233,858 1,935 2,401 (Over)/Under provision in prior years (5,310) (8,313) 3 54 (Over)/Under provision of deferred tax (6,828) 475 – – Tax expense 230,241 226,020 1,938 2,455 Recognised in other comprehensive income: Deferred tax expense Other investment (1,455) (702) – – Provisions 7,041 (320) – – Available-for-sale (8,958) 8,645 – – (3,372) 7,623 – – The Inland Revenue Board (“IRB”) had, on 8 September 2017, issued to Takaful Malaysia notices of additional assessment (i.e. Form JA) for the years of assessment (“YA”) 2012, 2013, and 2014. The additional tax payable by Takaful Malaysia under the above-mentioned notices is RM12,561,630.50. As a result of the above, IRB had also treated the tax returns made by Takaful Malaysia for the above years of assessment as incorrect, and imposed a penalty of RM6,200,802.97 to Takaful Malaysia. Takaful Malaysia has paid the additional tax on 4 October 2017 and submitted an appeal (Form Q) to Special Commissioner of Income Tax against the notice of assessment on 5 October 2017. Takaful Malaysia is of the view that there are strong justifications for its appeal and have treated the additional tax payment as tax recoverable. NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 245 Overview Value Creation Accountability Financial Statements Sustainability Performance Data Shareholders Information 21 st AGM Information Management Discussion & Analysis