Tax (Tables)

12 Months Ended

Dec. 31, 2019



Tax expense
		2019		2018		2017
	Footnotes	$m		$m		$m
Current tax	1	3,768		4,195		4,264
– for this year		3,689		4,158		4,115
– adjustments in respect of prior years		79		37		149
Deferred tax		871		670		1,024
– origination and reversal of temporary differences		684		656		(228	)
– effect of changes in tax rates		(11	)	17		1,337
– adjustments in respect of prior years		198		(3	)	(85	)
Year ended 31 Dec	2	4,639		4,865		5,288


1	Current tax included Hong Kong profits tax of $1,413m (2018: $1,532m; 2017: $1,350m). The Hong Kong tax rate applying to the profits of subsidiaries assessable in Hong Kong was 16.5% (2018: 16.5%; 2017: 16.5%).


2	In addition to amounts recorded in the income statement, a tax charge of $6m (2018: credit of $234m) was recorded directly to equity

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:



	2019				2018				2017
	$m		%		$m		%		$m		%
Profit before tax	13,347				19,890				17,167
Tax expense
Taxation at UK corporation tax rate of 19.00% (2018: 19.00%; 2017: 19.25%)	2,536		19.0		3,779		19.0		3,305		19.25
Impact of differently taxed overseas profits in overseas locations	253		1.9		264		1.3		407		2.3
Items increasing tax charge in 2019:
– non-deductible goodwill write-down	1,421		10.7		—		—		—		—
– local taxes and overseas withholding taxes	484		3.6		437		2.2		618		3.6
– other permanent disallowables	481		3.6		396		2.0		400		2.3
– non-deductible UK customer compensation	382		2.9		16		0.1		166		1.0
– UK tax losses not recognised	364		2.7		435		2.2		70		0.4
– adjustments in respect of prior period liabilities	277		2.1		34		0.2		64		0.4
– bank levy	184		1.4		191		1.0		180		1.0
– impacts of hyperinflation	29		0.2		78		0.4		—		—
– UK banking surcharge	29		0.2		229		1.1		136		0.8
– non-UK movements in unrecognised deferred tax	12		0.1		32		0.2		(16	)	(0.1	)
– non-deductible regulatory settlements	5		—		153		0.8		(132	)	(0.8	)
– deferred tax remeasurement due to US federal tax rate reduction	—		—		—		—		1,288		7.5
Items reducing tax charge in 2019:
– non-taxable income and gains	(844	)	(6.3	)	(691	)	(3.5	)	(766	)	(4.4	)
– effect of profits in associates and joint ventures	(467	)	(3.5	)	(492	)	(2.5	)	(481	)	(2.8	)
– deductions for AT1 coupon payments	(263	)	(2.0	)	—		—		—		—
– non-taxable gain on dilution of shareholding in SABB	(181	)	(1.3	)	—		—		—		—
– impact of changes in tax rates	(11	)	(0.1	)	17		0.1		49		0.3
– other items	(52	)	(0.4	)	(13	)	(0.1	)	—		—
Year ended 31 Dec	4,639		34.8		4,865		24.5		5,288		30.8

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		Fixed assets		Retirement obligations		Other		Total
	Footnotes	$m		$m		$m		$m		$m		$m		$m		$m		$m
Assets		982		1,156		492		—		629		1,151		—		738		5,148
Liabilities		—		—		(376	)	(1,271	)	—		—		(1,387	)	(283	)	(3,317	)
At 1 Jan 2019		982		1,156		116		(1,271	)	629		1,151		(1,387	)	455		1,831
Income statement		45		266		(386	)	(303	)	(18	)	(185	)	(149	)	(141	)	(871	)
Other comprehensive income		—		—		544		—		—		—		30		(391	)	183
Equity		—		—		—		—		—		—		—		—		—
Foreign exchange and other adjustments		(44	)	(8	)	147		(47	)	39		36		(107	)	98		114
At 31 Dec 2019		983		1,414		421		(1,621	)	650		1,002		(1,613	)	21		1,257
Assets	2	983		1,414		979		—		650		1,002		—		422		5,450
Liabilities	2	—		—		(558	)	(1,621	)	—		—		(1,613	)	(401	)	(4,193	)

Assets		713		1,373		1,282		—		643		1,201		352		760		6,324
Liabilities		—		—		(93	)	(1,182	)	—		—		(1,387	)	(968	)	(3,630	)
At 1 Jan 2018		713		1,373		1,189		(1,182	)	643		1,201		(1,035	)	(208	)	2,694
IFRS 9 transitional adjustment		358		—		(411	)	—		—		—		—		459		406
Income statement		(72	)	(203	)	51		(104	)	19		(68	)	35		(328	)	(670	)
Other comprehensive income		—		—		(722	)	—		—		—		25		165		(532	)
Equity		—		—		—		—		—		—		(15	)	(8	)	(23	)
Foreign exchange and other adjustments		(17	)	(14	)	9		15		(33	)	18		(397	)	375		(44	)
At 31 Dec 2018		982		1,156		116		(1,271	)	629		1,151		(1,387	)	455		1,831
Assets	2	982		1,156		492		—		629		1,151		—		738		5,148
Liabilities	2	—		—		(376	)	(1,271	)	—		—		(1,387	)	(283	)	(3,317	)


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 $4,632m (2018: $4,450m) and deferred tax liabilities $3,375m (2018: $2,619m).