Tax (Tables)

12 Months Ended

Dec. 31, 2018



Tax expense
		2018		2017		2016
	Footnotes	$m		$m		$m
Current tax	1	4,195		4,264		3,669
– for this year		4,158		4,115		3,525
– adjustments in respect of prior years		37		149		144
Deferred tax		670		1,024		(3	)
– origination and reversal of temporary differences		656		(228	)	(111	)
– effect of changes in tax rates		17		1,337		(4	)
– adjustments in respect of prior years		(3	)	(85	)	112
Year ended 31 Dec		4,865		5,288		3,666


1	Current tax included Hong Kong profits tax of $1,532m (2017: $1,350m; 2016: $1,118m). The Hong Kong tax rate applying to the profits of subsidiaries assessable in Hong Kong was 16.5% (2017: 16.5%; 2016: 16.5%).

Schedule of tax reconciliation

The tax charged to the income statement differs from the tax charge that would apply if all profits had been taxed at the UK corporation tax rate as follows:



	2018				2017				2016
	$m		%		$m		%		$m		%
Profit before tax	19,890				17,167				7,112
Tax expense
Taxation at UK corporation tax rate of 19.00% (2017: 19.25%; 2016: 20.0%)	3,779		19.00		3,305		19.25		1,422		20.00
Impact of differently taxed overseas profits in overseas locations	264		1.3		407		2.3		43		0.6
Items increasing tax charge in 2018:
– local taxes and overseas withholding taxes	437		2.2		618		3.6		434		6.1
– UK tax losses not recognised	435		2.2		70		0.4		305		4.3
– other permanent disallowables	396		2.0		400		2.3		438		6.2
– UK banking surcharge	229		1.1		136		0.8		199		2.8
– bank levy	191		1.0		180		1.0		170		2.4
– non-deductible regulatory settlements	153		0.8		(132	)	(0.8	)	20		0.3
– impacts of hyperinflation	78		0.4		—		—		—		—
– adjustments in respect of prior period liabilities	34		0.2		64		0.4		256		3.6
– non-UK tax losses not recognised	32		0.2		33		0.2		147		2.1
– change in tax rates	17		0.1		49		0.3		(4	)	(0.1	)
– non-deductible UK customer compensation	16		0.1		166		1.0		162		2.3
– deferred tax remeasurement due to US federal tax rate reduction	—		—		1,288		7.5		—		—
– non-deductible goodwill write-down	—		—		—		—		648		9.1
– non-deductible loss and taxes suffered on Brazil disposal	—		—		—		—		464		6.5
Items reducing tax charge in 2018:
– non-taxable income and gains	(691	)	(3.5	)	(766	)	(4.4	)	(577	)	(8.1	)
– effect of profits in associates and joint ventures	(492	)	(2.5	)	(481	)	(2.8	)	(461	)	(6.5	)
– other items	(13	)	(0.1	)	—		—		—		—
– other deferred tax temporary differences previously not recognised	—		—		(49	)	(0.3	)	—		—
Year ended 31 Dec	4,865		24.5		5,288		30.8		3,666		51.6

Schedule of movement of deferred tax assets and liabilities



Movement of deferred tax assets and liabilities
		Loan impairment provisions		Unused tax losses and tax credits		Derivatives, FVOD¹and other investments		Insurance business		Expense provisions		Other		Total
	Footnotes	$m		$m		$m		$m		$m		$m		$m
Assets		713		1,373		1,282		—		643		2,313		6,324
Liabilities		—		—		(93	)	(1,182	)	—		(2,355	)	(3,630	)
At 1 Jan 2018		713		1,373		1,189		(1,182	)	643		(42	)	2,694
IFRS 9 transitional adjustment		358		—		(411	)	—		—		459		406
Income statement		(72	)	(203	)	51		(104	)	19		(361	)	(670	)
Other comprehensive income		—		—		(722	)	—		—		190		(532	)
Equity		—		—		—		—		—		(23	)	(23	)
Foreign exchange and other adjustments		(17	)	(14	)	9		15		(33	)	(4	)	(44	)
At 31 Dec 2018		982		1,156		116		(1,271	)	629		219		1,831
Assets	2	982		1,156		492		—		629		1,889		5,148
Liabilities	2	—		—		(376	)	(1,271	)	—		(1,670	)	(3,317	)

Assets		950		2,212		1,441		—		893		1,857		7,353
Liabilities		—		—		(274	)	(1,170	)	—		(1,369	)	(2,813	)
At 1 Jan 2017		950		2,212		1,167		(1,170	)	893		488		4,540
Income statement		(235	)	(873	)	(397	)	12		(269	)	738		(1,024	)
Other comprehensive income		3		(6	)	368		—		—		(1,255	)	(890	)
Equity		—		—		—		—		—		29		29
Foreign exchange and other adjustments		(5	)	40		51		(24	)	19		(42	)	39
At 31 Dec 2017		713		1,373		1,189		(1,182	)	643		(42	)	2,694
Assets	2	713		1,373		1,282		—		643		2,313		6,324
Liabilities	2	—		—		(93	)	(1,182	)	—		(2,355	)	(3,630	)


1	Fair value of own debt.


2	After netting off balances within countries, the balances as disclosed in the accounts are as follows: deferred tax assets $4,450m (2017: $4,676m) and deferred tax liabilities $2,619m (2017: $1,982m).