EXCEL FORCE MSC BERHAD Annual Report 2018

101 ANNUAL REPORT 2018 25. Taxation (cont’d) The subsidiary company, Insage (MSC) Sdn. Bhd. (“Insage”) was awarded with the Multimedia Super Corridor (“MSC”) status by the Government of Malaysia. The financial incentive awarded to Insage under the MSC status is “Pioneer Status” under Section 4A of the Promotion of Investment Act, 1986. Insage has been granted the Pioneer Status by the Ministry of International Trade and Industry for services under the Promotion Investment Act, 1986 in which the statutory income is exempted from tax for a period of 5 years from 23 March 2014 to 22 March 2019. The salient terms of the Pioneer Status are as follows: (i) 100% tax exemption on business income; (ii) unabsorbed pioneer capital allowances can be carried forward to the post pioneer period and deducted against the post-pioneer income of a business relating to the same promoted activity or promoted product; and (iii) unabsorbed pioneer losses can be carried forward to the post pioneer period and deducted against the post- pioneer income of a business relating to the same promoted activity or promoted product. Malaysian income tax is calculated at the statutory tax rate of 24% (2017: 24%) of the estimated assessable profits for the financial year. A reconciliation of income tax expense applicable to profit before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company are as follows: Group Company 2018 2017 2018 2017 RM RM RM RM Profit before tax 7,934,907 8,112,518 7,717,522 8,012,691 At Malaysian statutory tax rate of 24% (2017: 24%) 1,904,378 1,947,004 1,852,205 1,923,046 Expenses not deductible for tax purposes 786,016 690,185 694,706 599,673 Income not subject to tax (1,334,983) (781,430) (1,330,743) (781,430) Deferred tax assets not recognised (82,521) (114,470) 55,172 - Under/(Over) provision in respect of prior years - income tax 41,697 65,350 41,697 64,909 - deferred tax (37,042) (17,379) (37,042) (17,379) Tax expense for the financial year 1,277,545 1,789,260 1,275,995 1,788,819 The Group have the following unused tax losses available for carry forward, to off-set against future taxable profits. The said amounts are subject to approval by the tax authorities. Group 2018 2017 RM RM Unused tax losses 1,914,203 2,498,193 Notes To The Financial Statements 31 December 2018 (cont’d)