Electrical and Mechanical Services Department

7 Provision for taxation

Notional profits tax is provided at the rate of 16% (1998:16.5%).
A payment in lieu of profits tax calculated on the basis of the provisions of the Inland Revenue Ordinance (Cap. 112) will be made to the Government. Provision is made for deferred tax in respect of all material timing differences attributable to accelerated depreciation allowances on fixed assets except where it is considered that no liability will crystallize in the foreseeable future.

1999
$'000 1998
$'000

Notional profits tax 56,369 55,593

Profits tax rebate (5,559) -

Deferred tax

Capital allowances less than related depreciation charges (4,752) (3,903)

Adjustment due to a change of tax rate - (214)

(4,752) (4,117)

Taxation for the year 46,058 51,476

8. Dividend
A dividend of $98.287 million being 30% of the profit after taxation is proposed for the year ended 31 March 1999 and is payable to the Government (1998: $78.462 million).
9. Rate of return on fixed assets
This is calculated as a percentage of operating profit and interest income after taxation to Average Net Fixed Assets (ANFA). The Electrical and Mechanical Services Trading Fund is expected to meet a target return of 13.5% per annum on ANFA as determined by the Financial Secretary.

	1999 $'000	1998 $'000

Notional profits tax	56,369	55,593
Profits tax rebate	(5,559)	-

Deferred tax
Capital allowances less than related depreciation charges	(4,752)	(3,903)
Adjustment due to a change of tax rate	-	(214)

	(4,752)	(4,117)

Taxation for the year	46,058	51,476