12. Income tax
The major components of the income tax expense are:
For the year ended | ||
|---|---|---|
31 March 2025 $m | 31 March 2024 $m | |
1 As on 31 March 2024, this primarily includes amount of a deferred tax liability on undistributed earnings in Nigeria reversed due to negative retained earnings owing to foreign exchange loss recorded during the year. | ||
Current income tax | ||
– For the year | 296 | 333 |
– Adjustments for prior periods | 1 | (1) |
297 | 332 | |
Deferred tax | ||
– Origination and reversal of temporary differences | 36 | (274) |
– Adjustments for prior periods1 | – | (32) |
36 | (306) | |
Income tax expenses | 333 | 26 |
Factors affecting the tax expense for the year
The table below explains the differences between the expected tax expense, being the aggregate of the Group’s geographical split of profits/(loss) multiplied by the relevant local tax rates and the Group’s total tax expense for each year:
For the year ended | ||
|---|---|---|
31 March 2025 $m | 31 March 2024 $m | |
1 Blended tax rate has been derived by applying the following formula: Profit/(loss) before tax for each entity * Respective statutory tax rate/Consolidated profit before tax. For effective tax rate, refer to alternative performance measures. 2 Incremental Deferred tax asset (net) recognized during the year ended 31 March 25 of $5m in AMC BV based on forecasted profitability. During the year ended 31 March 2024, a Deferred tax asset was recognized for $29m in DRC, $5m in Tanzania and ($19m) in Niger respectively for initial temporary differences based on forecasted profitability. | ||
Continuing profit before tax as shown in the consolidated income statement | 661 | (63) |
Blended tax rate1 | 32% | 32% |
Tax expense at the Group’s blended tax rate | 214 | (20) |
Effect of: | ||
Tax on dividend & undistributed retained earnings of subsidiaries | 31 | 28 |
Deferred tax recognised on projected profitability2 | (5) | (15) |
Irrecoverable withholding taxes | 25 | 26 |
Adjustment in respect of previous years | 0 | (34) |
Settlement of various disputes | 1 | 1 |
Expenses (net) not taxable | 17 | 9 |
Losses for which no deferred tax asset recognised | 50 | 28 |
Other tax | 0 | 3 |
Income tax expense | 333 | 26 |
The analysis of deferred tax assets and liabilities is as follows:
Deferred tax assets and liabilities are consolidated jurisdiction wise at component level. The breakup of deferred tax assets and net deferred tax liabilities is summarized below.
Deferred tax in jurisdictions with net deferred tax assets is comprised of:
As of | ||
|---|---|---|
31 March 2025 $m | 31 March 2024 $m | |
Deferred tax assets (net) | ||
a) Deferred tax asset arising out of | ||
Carried forward losses | 266 | 178 |
Fair valuation of financial instruments and exchange differences | 199 | 323 |
Depreciation / amortisation on PPE / intangible assets | 90 | 80 |
Provision for impairment of trade receivables / advances | 31 | 30 |
Deferred tax asset on fair valuation of PPE / intangible assets | 3 | 5 |
Employee benefits | 9 | 8 |
Provision for inventories | 4 | 3 |
Deferred revenue | 1 | 2 |
Others | 4 | 4 |
b) Deferred tax liability due to | ||
Fair valuation of financial instruments and exchange differences | (0) | (8) |
Depreciation / amortisation on PPE / intangible assets | (95) | (78) |
Others | (3) | (4) |
509 | 543 | |
Deferred tax in jurisdictions with net deferred tax liabilities is comprised of:
As of | ||
|---|---|---|
31 March 2025 $m | 31 March 2024 $m | |
Deferred tax liabilities (net) | ||
a) Deferred tax liability due to | ||
Deferred tax liability on retained earnings | (39) | (29) |
Depreciation / amortisation on PPE / intangible assets | (67) | (46) |
Fair valuation of financial instruments and exchange differences | (0) | (0) |
Others | (8) | (3) |
b) Deferred tax asset arising out of | ||
Provision for impairment of trade receivables / advances | 5 | 5 |
Fair valuation of financial instruments and exchange differences | 1 | 2 |
Deferred revenue | 1 | 2 |
Employee benefits | 1 | 1 |
Provision for inventories | 0 | 0 |
Others | – | 1 |
(106) | (67) | |
Net deferred tax asset/(liability) reflected in the statement of financial position is as follows:
As of | ||
|---|---|---|
31 March 2025 $m | 31 March 2024 $m | |
Deferred tax assets | 509 | 543 |
Deferred tax liabilities | (106) | (67) |
Net | 403 | 476 |
Movement reflected in profit and loss for each of the temporary differences and tax losses carry forward is as follows:
For the year ended | ||
|---|---|---|
31 March 2025 $m | 31 March 2024 $m | |
Deferred tax expenses/(benefit) | ||
Carried forward losses | (97) | (15) |
Depreciation / amortisation on PPE / intangible assets | 28 | (31) |
Undistributed retained earnings | 9 | (21) |
Fair valuation of financial instruments and exchange differences | 92 | (241) |
Provision for impairment of trade receivables / advances | (1) | 0 |
Deferred revenue | 0 | 1 |
Deferred tax on fair valuation of PPE / Intangible assets | 3 | (1) |
Employee benefits | (1) | 0 |
Provision for inventories | (2) | 3 |
Others | 5 | (1) |
36 | (306) | |
The movement in net balance of deferred tax asset and liabilities from prior year end is as follows:
As of | ||
|---|---|---|
31 March 2025 $m | 31 March 2024 $m | |
1 Opening Hyperinflationary adjustment as at 1 April 2024 related to Malawi operations (refer to note 5(g)) | ||
Opening balance | 476 | 229 |
Opening hyperinflationary adjustment1 | (17) | – |
Tax credit recognised in statement of profit and loss | (36) | 306 |
Tax credit recognised in other comprehensive loss | 1 | 8 |
Foreign currency translation differences | (21) | (67) |
Closing balance | 403 | 476 |
Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences and carry forward tax losses/credits can be utilised. Accordingly, the Group has not recognised deferred tax assets in respect of deductible temporary differences and carry forward tax losses of $940m and $891m as of 31 March 2025 and 31 March 2024 respectively, as it is not currently probable that relevant taxable profits will be available in future. The applicable tax rates for the same vary from 20% to 33%, depending on the tax jurisdiction in which the respective Group entity operates.
Unused tax losses and deductible temporary differences for which no deferred tax assets is recognised:
As of | ||
|---|---|---|
31 March 2025 $m | 31 March 2024 $m | |
Expiring within 5 years | 280 | 257 |
Expiring beyond 5 years | – | 0 |
Unlimited | 660 | 634 |
940 | 891 | |
Unused tax losses and deductible temporary differences for which deferred tax assets is recognised:
As of | ||
|---|---|---|
31 March 2025 $m | 31 March 2024 $m | |
Expiring within 5 years | 133 | – |
Expiring beyond 5 years | – | – |
Unlimited | 1,482 | 1,750 |
1,615 | 1,750 | |
The group has not recognised deferred tax liability with respect to unremitted retained earnings and associated foreign currency translation reserve with respect to certain of its subsidiaries where the group is in a position to control the timing of the distribution of profits and it is probable that the subsidiaries will not distribute the profits in the foreseeable future. The taxable temporary difference associated with respect to unremitted retained earnings is $33m and $24m as of 31 March 2025 and 31 March 2024 respectively. The distribution of the unremitted retained earnings is expected to attract a tax in range of 5% to 20% depending on the tax rate applicable as of 31 March 2025 in the jurisdiction in which the respective the group entity operates.
Factors affecting the tax charge in future years
a)
The Group’s future tax charge and effective tax rate, could be affected by the following factors:
- Change in income tax rate in any of the jurisdictions in which Group operates
- Overall profit mix between profit and loss making entities
- Withholding tax on distributed and undistributed retained earnings of subsidiaries
- Recognition of deferred tax assets in any of the Group entities
b)
The Group is routinely subjected to audit by tax authorities in the jurisdictions in which the Group operates. The Group recognises tax provisions based on reasonable estimates for those matters where determination of tax is uncertain but it is considered probable that there will be a future outflow of funds to tax authorities. The amount of these provisions is based on various factors, such as experience of previous tax audits and different interpretations of tax regulations by the tax authority in jurisdictions in which the Group operates, the amount ultimately paid for these uncertain tax cases may differ materially and could, therefore, affect the Group’s overall profitability and cash flows in the future.
The tax impact of a transaction disclosed as contingent liability can also be uncertain until a conclusion is reached with the relevant tax authority or through a legal process. (refer to note 28 for details of the contingencies pertaining to income tax).
c)
The Group has applied the temporary exception issued by the IASB in May 2023 from the accounting requirements for deferred taxes in IAS 12. Accordingly, the Group neither recognizes nor discloses information about deferred tax assets and liabilities related to Pillar Two income taxes.
On 20 June 2023, the government of the United Kingdom, where the parent company is incorporated, enacted the Pillar Two income taxes legislation effective for the Group from 1 April 2024. Under the legislation, the parent company is required to pay, in UK, top-up tax on profits of its subsidiaries that are taxed at an effective tax rate of less than 15%. The Group predominantly operates in jurisdictions which have a simplified effective tax rate above 15% and the company has performed transitional safe harbour assessment for all the Group’s jurisdictions which resulted in no material top-up tax.