Income tax

12 Months Ended

Dec. 31, 2019

Text block [abstract]

Income tax

16 Income tax

(a) Income tax expense in the consolidated income statement

	2019			2018			2017
	RMB million			RMB million			RMB million
PRC income tax
–Provision for the year		1,611			962			2,280
–Under/(over)-provision in prior year		10			(27	)		(2	)
		1,621			935			2,278
Deferred tax (Note 29)
Origination and reversal of temporary differences		(650	)		65			(302	)
Income tax expense		971			1,000			1,976

In respect of a majority of the Group’s airlines operation outside mainland China, the Group has either obtained exemptions from overseas taxation pursuant to the bilateral aviation agreements between the overseas governments and the PRC government, or has sustained tax losses in those overseas jurisdictions. Accordingly, no provision for overseas income tax has been made for overseas airlines operation in the current and prior years.

For the year of 2019, the Company and its branches are liable to income tax rates ranging from 15% to 25% (2018: 15% to 25%; 2017: 15% to 25%), and the subsidiaries of the Company are liable to income tax rates ranging from 15% to 30% (2018: 15% to 30%; 2017: 15% to 25%). China Southern West Australian Flying College Pty Ltd. (“Flying College”), one of the subsidiaries of the Company, is located in Australia and is subject to income tax at 30%. Certain subsidiaries of the Company are located in Hong Kong and are subject to income tax at 16.5%.

(b) Reconciliation between actual tax expense and calculated tax based on accounting profit at applicable tax rates

	2019			2018			2017
	RMB million			RMB million			RMB million
Profit before income tax		4,055			4,364			8,874
Notional tax on profit before taxation, calculated at the rates applicable to profits in the tax jurisdictions concerned (Note 16(a))		964			1,089			2,179
Adjustments for tax effect of:
Non-deductible expenses		18			23			9
Share of results of associates and joint ventures and other non-taxable income		(50	)		(121	)		(137	)
Taxable temporary differences for which no deferred tax liabilities were recognized		—			—			(27	)
Unused tax losses and deductible temporary differences for which no deferred tax assets were recognized		62			73			26
Utilization of unused tax losses and deductible temporary differences for which no deferred tax assets were recognized in prior years		(3	)		(17	)		(72	)
Under/(over)-provision in prior year		10			(27	)		(2	)
Super deduction of research and development expenses		(30	)		(20	)		—
Tax expense		971			1,000			1,976