# 11. TAXATION

<table><tr><td rowspan="2"></td><td>2020</td><td>2019</td></tr><tr><td>RMB’000</td><td>RMB’000</td></tr><tr><td>The charge comprises:</td><td></td><td></td></tr><tr><td>Current tax</td><td></td><td></td></tr><tr><td>– PRC Enterprise Income Tax (“EIT”)</td><td>38,040</td><td>35,995</td></tr><tr><td>– Withholding tax levied on interest income of Hong Kong subsidiaries</td><td>4,572</td><td>4,820</td></tr><tr><td>– Withholding tax levied on dividend declared of a PRC subsidiary</td><td>–</td><td>1,625</td></tr><tr><td></td><td>42,612</td><td>42,440</td></tr><tr><td>Deferred tax (note 19)</td><td>7,080</td><td>24,927</td></tr><tr><td></td><td>49,692</td><td>67,367</td></tr></table>

No provision for Hong Kong Profits Tax has been made in the consolidated financial statements as the Group’s operation in Hong Kong had no assessable profit during both years.

Under the Law of the PRC on EIT (the “EIT Law”) and Implementation Regulation of the EIT Law, the tax rate of the PRC subsidiaries is 25% for both years. Certain PRC subsidiaries enjoy preferential tax rate according to approval from local tax bureau, including (i) a PRC subsidiary which enjoys preferential tax rate of 15% since year 2016 and applies a further preferential tax rate of 12.5% for the year 2020; (ii) a PRC subsidiary, located in Khorgos city in the PRC, was exempted from EIT in the first 5 years since set up in year 2018, according to “關於新疆喀什霍爾果斯兩個特殊經濟開發區企業所得稅優惠政策的通知” (Caishui [2011] 112) issued by the State Administration of Taxation and the Ministry of Finance of the PRC.

The tax charge for the year can be reconciled to the profit before taxation per the consolidated statement of profit or loss and other comprehensive income as follows:

<table><tr><td rowspan="2"></td><td>2020</td><td>2019</td></tr><tr><td>RMB’000</td><td>RMB’000</td></tr><tr><td>Profit before taxation</td><td>387,088</td><td>362,492</td></tr><tr><td>Tax at the domestic EIT rate of 25%</td><td>96,772</td><td>90,623</td></tr><tr><td>Tax effect of share of profit of a joint venture and associates</td><td>(3,676)</td><td>(1,444)</td></tr><tr><td>Tax effect of expenses not deductible for tax purposes</td><td>10,731</td><td>19,288</td></tr><tr><td>Effect of different tax rates of the subsidiaries</td><td>(23,527)</td><td>(8,950)</td></tr><tr><td>Effect of tax exemption granted to a PRC subsidiary</td><td>(50,229)</td><td>(50,475)</td></tr><tr><td>Tax effect of tax losses not recognised</td><td>4,618</td><td>3,869</td></tr><tr><td>Utilisation of tax losses previously not recognised</td><td>–</td><td>(1,740)</td></tr><tr><td>Tax benefit on research and development expenses</td><td>(2,660)</td><td>(1,976)</td></tr><tr><td>Withholding tax on distributable earnings of the PRC subsidiaries</td><td>17,663</td><td>18,172</td></tr><tr><td>Tax charge for the year</td><td>49,692</td><td>67,367</td></tr></table>

# 12. PROFIT FOR THE YEAR/OTHER COMPREHENSIVE (EXPENSE) INCOME

# (a) Profit for the year

Profit for the year has been arrived at after charging (crediting):

<table><tr><td rowspan="2"></td><td>2020</td><td>2019</td></tr><tr><td>RMB’000</td><td>RMB’000</td></tr><tr><td>Directors’ emoluments (note 13)</td><td>6,503</td><td>5,536</td></tr><tr><td>Other staffs costs (excluding directors’ emoluments)</td><td></td><td></td></tr><tr><td>– Salaries, allowances and other staff benefits, including share 
option expenses</td><td>116,194</td><td>82,630</td></tr><tr><td>– Staffs’ retirement benefit scheme contributions</td><td>656</td><td>4,201</td></tr><tr><td>Total staff costs</td><td>123,353</td><td>92,367</td></tr><tr><td>Less: amount capitalised in development costs</td><td>(5,581)</td><td>(9,188)</td></tr><tr><td>Less: st aff costs recognised as research and development costs in 
other expenses</td><td>(22,577)</td><td>(13,596)</td></tr><tr><td>Staff costs recognised in administrative expenses</td><td>95,195</td><td>69,583</td></tr><tr><td>Total depreciation of property and equipment</td><td>2,310</td><td>1,694</td></tr><tr><td>Less: amount capitalised in development costs</td><td>(56)</td><td>(131)</td></tr><tr><td>Depreciation of property and equipment recognised in 
administrative expenses</td><td>2,254</td><td>1,563</td></tr><tr><td>Depreciation of right-of-use assets recognised in 
administrative expenses</td><td>9,970</td><td>7,202</td></tr><tr><td>Amortisation of intangible assets recognised in 
administrative expenses</td><td>5,494</td><td>3,641</td></tr><tr><td>Auditor’s remuneration recognised in administrative expenses</td><td>2,900</td><td>2,520</td></tr><tr><td>Covid-19-related rent concessions (note 18)</td><td>(224)</td><td>–</td></tr><tr><td>Other expenses</td><td></td><td></td></tr><tr><td>– Research and development costs</td><td>23,466</td><td>14,269</td></tr><tr><td>– Donation</td><td>1,060</td><td>1,964</td></tr><tr><td>Total other expenses</td><td>24,526</td><td>16,233</td></tr></table>