BIMB Integrated Annual Report 2019

43 TAX EXPENSE (CONTINUED) A reconciliation of effective tax expense for the Group and Company are as follows: Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 Profit before tax 1,205,014 1,065,455 351,852 281,916 Income tax calculated using Malaysian tax rate of 24% 289,203 255,709 84,444 67,660 Non-deductible expenses 94,869 71,703 4,004 3,302 Non-deductible Sukuk’s finance cost 12,644 21,491 12,644 21,491 Non-taxable income (130,115) (94,234) (98,821) (89,295) Derecognition of deferred tax assets – 10,315 – – Effect of tax rates in foreign jurisdictions 2 (1,209) – – Zakat (3,403) – – – 263,200 263,775 2,271 3,158 Over provision in prior years (5,966) (14,626) (16) (6) Under provision of deferred tax 151 196 – – Tax expense 257,385 249,345 2,255 3,152 Recognised in other comprehensive income: Deferred tax expense Other investment (6,300) (998) – – Provisions 39 101 – – Financial assets at fair value through other comprehensive income (FVOCI) (53,040) (3,633) – – (59,301) (4,530) – – 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. The matter above has been fixed for hearing at the Court on 1 st and 2 nd September 2021. NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 (CONTINUED) 262 Integrated Annual Report 2019 Group Overview Sustaining The Group Management Discussion & Analysis Group Governance