CHAPTER 7: Taxation

	Group		Company
For the year ended 31 December	2020 %	2019 %	2020 %	2019 %
Tax as a percentage of profit before tax from continuing operations	7.3	10.9	(7.8)	0.3
Tax effect of:
– Net capital gains¹	2.1	1.0	1.9	1.2
– Net impairment charges on non-current assets²	(1.5)	0.1	(38.4)	0.3
– Expenses not deductible for tax purposes³	(2.2)	1.4	(1.1)	1.9
– Exempt income⁴	2.5		65.9	24.4
– Special tax allowances		0.1
– Post-tax equity-accounted income⁵	18.2	14.7
– Remeasurements of foreign tax rate differences	0.3	0.3
– Prior year tax adjustments⁶		1.4		(0.1)
– Deferred tax assets recognised/(not recognised)⁷	1.8	(1.6)	7.5
– Imputed income from controlled foreign companies and investments	(0.5)	(0.3)
Standard tax rate	28.0	28.0	28.0	28.0
Effective tax rate for continuing operations, excluding income from equity-accounted investments	20.8	22.9
¹ Relates to the deemed disposal of the Cennergi JV and the disposal of EMJV.
² Impairment charges and impairment reversals were split out of the other non-deductible expenses line. Refer note 8.5.
³ Expenses not deductible for tax purposes:	(2.2)	1.4	(1.1)	1.9
– Consulting, legal and other professional fees	(0.1)	(0.7)	(0.4)	(1.1)
– ESD grants	(0.1)	(0.1)	(0.4)	(0.2)
– Share-based payments		1.3	(0.3)	1.5
– Penalties and interest on taxes		(0.1)
– Contingent consideration fair value adjustments		1.3		2.2
– Other⁸	(2.0)	(0.3)	(0.1)	(0.5)

⁴	For group, relates mainly to contributions received by Exxaro ESOP Trust and donations received by Exxaro Community NPC, a tax exempt institution. For company, this relates to dividend income received.
⁵	The increase is as a result of the increase in the SIOC equity-accounted income (refer note 9.3).
⁶	Includes disputes relating to imputed section 9D income from controlled foreign companies, which were settled with SARS in the prior year.
⁷	A deferred tax asset has been recognised on assessed capital losses in anticipation of the sale of the Tronox investments. In the prior year only a portion (approximately 50%) had been recognised in company. Set off against the recognition of deferred tax assets are deferred tax assets not recognised for the group relating to tax losses, provisions and unredeemed capital expenditure. The most significant tax loss and unredeemed capital expenditure on which no deferred tax asset was recognised is that of Dorstfontein, amounting to R508 million.
⁸	For group, relates mainly to the movement in the indemnification asset in 2020.

Exxaro report selector 2020