Group – Notes to the group financial statements

2009	2010	Figures in million				2010	2009
SA Rands						US Dollars
		12 Taxation
		South African taxation
153	–		Mining tax ⁽¹⁾			–	19
89	112		Non-mining tax ⁽²⁾			13	10
33	(628)		(Over) under provision prior year			(89)	4
			Deferred taxation
535	(1,377)				Temporary differences ⁽³⁾	(195)	61
(1,451)	2,353				Unrealised non-hedge derivatives and other commodity contracts	334	(181)
(156)	(39)				Change in estimated deferred tax rate ⁽⁴⁾	(6)	(21)
(797)	421					57	(108)
		Foreign taxation
1,113	1,628		Normal taxation ⁽⁵⁾			226	138
(50)	(17)		Over provision prior year			(3)	(7)
			Deferred taxation
1,220	(37)			Temporary differences ⁽³⁾		(7)	164
(314)	23			Unrealised non-hedge derivatives and other commodity contracts		3	(40)
1,969	1,597					219	255

1,172	2,018					276	147
		Tax reconciliation
		A reconciliation of the effective tax rate charged in the income statement to the prevailing estimated corporate tax rate is set out in the following table:
%	%					%	%
(100)	66	Effective tax rate				68	(121)
		Disallowable items
204	(12)		Derivative losses			(12)	236
–	(20)		transaction and finance costs			(20)	–
(23)	5		Share of equity accounted investments’ profit (loss)			5	(27)
(3)	(7)		Other			(7)	(3)
5	–	Foreign income tax allowances and rate differentials				(11)	31
(39)	–	Exchange variation and translation adjustments				9	(68)
10	(18)	Current unrecognised tax assets				(19)	12
(13)	1	Change in estimated deferred tax rate ⁽⁴⁾				1	(17)
(1)	20	Prior year’s provision				21	(3)
(5)	–	Other				–	(5)
35	35	Estimated corporate tax rate ⁽⁶⁾				35	35

⁽¹⁾	There was no mining tax charge in the current year as it was primarily offset by losses from the accelerated non-hedge derivative buy-backs.
⁽²⁾	In South Africa, non-mining income is taxed at the higher non-mining tax rate of 35% (2009: 35%) as the company has elected to be exempt from STC. Companies that elected to be subject to STC are taxed at the lower company tax rate, that of 28% (2009: 28%) for non-mining taxation purposes.
⁽³⁾	Included in temporary differences in South African taxation is a tax credit on the impairment and disposal of tangible assets of $28m, R193m (2009: tax credit $8m, R61m). Included in temporary differences of foreign taxation is a tax charge on the impairment reversals and disposal of tangible assets of $5m, R37m (2009: tax charge of $190m, R1,421m) (note 13).
⁽⁴⁾	In South Africa the mining operations are taxed on a variable rate that increases as profitability increases. The tax rate used to calculate deferred tax is based on the group’s current estimate of future profitability when temporary differences will reverse. Depending on the profitability of the operations, the tax rate can consequently be significantly different from year to year. The change in the estimated deferred tax rate at which the temporary differences will reverse amounts to a credit of $6m, R39m (2009: tax credit of $21m, R156m).
⁽⁵⁾	Included in normal foreign taxation is tax on the disposal of tangible assets of $nil, R4m (2009: $18m, R145m) (note 13).
⁽⁶⁾	Mining tax on mining income in South Africa is determined according to a formula based on profit and revenue from mining operations. The company has elected to be exempt from STC and is taxed at a higher rate of company tax for mining and non-mining income tax purposes.

2009	2010	Figures in million	2010	2009
SA Rands			US Dollars
		All mining capital expenditure is deducted to the extent that it does not result in an assessed loss and depreciation is ignored when calculating the South African mining income. Capital expenditure not deducted from mining income is carried forward as unredeemed capital to be deducted from future mining income. South Africa operates under two tax paying operations, Vaal River Operation and West Wits Operation. Under ring-fencing legislation, each operation is treated separately and deductions can only be utilised against income generated by the relevant tax operation. The formula for determining the South African mining tax rate is: Y = 43 – 215/X (2009: Y = 43 – 215/X) where Y is the percentage rate of tax payable and X is the ratio of mining profit net of any redeemable capital expenditure to mining revenue expressed as a percentage.
		Unrecognised tax losses
2,964	1,548	Unrecognised tax losses of the US operations which are available for offset against future profits earned in the US	236	399

		Analysis of tax losses
		Tax losses available to be used against future profits
943	–	– utilisation required within one year	–	127
36	32	– utilisation required between two and five years	5	5
1,985	1,516	– utilisation in excess of five years	231	267
2,964	1,548		236	399

		Unrecognised tax losses utilised
1,741	1,416	Assessed losses utilised during the year	163	184

12 Taxation