Income taxes (Tables)

12 Months Ended

Dec. 31, 2016

The provision for income taxes consists of the following:



			Provision for income taxes
Year ended December 31, 2016	Pre-tax (loss)/ income $’000		Current $’000		Deferred $’000		Total $’000

UK	(6,702	)	949		(444	)	505
Bermuda	160		—		—		—
United States	2,681		(1,510	)	(1,978	)	(3,488	)
Brazil	15,303		5,498		(121	)	5,377
Italy	19,971		4,468		1,998		6,466
Peru	13,965		4,261		1,625		5,886
Rest of the world	(4,622	)	3,007		(1,385	)	1,622

	40,756		16,673		(305	)	16,368



			Provision for income taxes
Year ended December 31, 2015	Pre-tax (loss)/ income $’000		Current $’000	Deferred $’000		Total $’000

UK	(18,965	)	1,585	(2,262	)	(677	)
Bermuda	(4,315	)	—	—		—
United States	1,439		1,310	1,698		3,008
Brazil	10,380		2,768	760		3,528
Italy	17,351		4,006	(824	)	3,182
Peru	12,078		3,154	(677	)	2,477
Rest of the world	7,386		4,341	1,182		5,523

	25,354		17,164	(123	)	17,041



			Provision for income taxes
Year ended December 31, 2014	Pre-tax (loss)/ income $’000		Current $’000	Deferred $’000		Total $’000

UK	(3,476	)	535	(1,279	)	(744	)
Bermuda	(25,702	)	—	—		—
United States	312		1,867	(193	)	1,674
Brazil	21,275		7,872	(447	)	7,425
Italy	9,572		6,752	(1,738	)	5,014
Peru	9,505		3,923	(1,652	)	2,271
Rest of the world	(3,381	)	5,540	(5,638	)	(98	)

	8,105		26,489	(10,947	)	15,542

Schedule of reconciliation of provision for income taxes

The reconciliation of earnings/(losses) before provision for income taxes and earnings from unconsolidated companies, net of tax at the statutory tax rate to the provision for income taxes is shown in the table below:



	2016		2015		2014
Year ended December 31,	$'000		$'000		$'000

Earnings/(losses) before provision for income taxes and earnings from unconsolidated companies, net of tax	40,756		25,354		8,105

Tax charge at statutory tax rate of 20%,15% and Nil% ⁽¹⁾	8,151		3,803		—

Exchange rate movements on deferred tax	(1,785	)	(1,912	)	(3,680	)
Notional interest deductions	(1,812	)	(1,867	)	(1,622	)
Imputed cross border charges	995		716		—
Disallowable goodwill impairment charges	—		2,198		—
Other permanent disallowable expenditure/(income)	483		5,762		2,566
Unrecognized tax loss generated on disposal of Hotel Ritz by Belmond	—		(16,029	)	—
Change in valuation allowance	4,876		16,320		4,573
Difference in taxation rates	9,509		12,948		15,089
Change in provisions for uncertain tax positions	(3,350	)	279		545
Change in tax rates	(643	)	(5,121	)	(2,081	)
Other	(56	)	(56	)	152

Provision for income taxes	16,368		17,041		15,542

⁽¹⁾ The Company migrated its tax residence to the United Kingdom on April 1, 2015, which has a statutory tax rate of 20%. Prior to that date, the Company was tax resident in Bermuda, which does not impose an income tax. The statutory tax rate of 15% represents the average statutory tax rate for the 12 months ended December, 31 2015.

Schedule of net deferred tax liabilities

The following summarizes Belmond’s net deferred tax assets and liabilities:



	2016		2015		2014
Year ended December 31,	$’000		$’000		$’000

Operating loss carry-forwards	82,292		89,513		111,779
Pensions	255		63		477
Share-based compensation	3,617		2,978		3,872
Other	8,283		8,952		11,559
Less: Valuation allowance	(70,241	)	(69,928	)	(91,462	)

Net deferred tax assets	24,206		31,578		36,225

Other	(5,032	)	(7,427	)	(6,138	)
Property, plant and equipment	(141,231	)	(147,265	)	(162,625	)

Deferred tax liabilities	(146,263	)	(154,692	)	(168,763	)

Net deferred tax liabilities	(122,057	)	(123,114	)	(132,538	)

Schedule of unrecognized tax benefits

At December 31, 2015, the total amounts of unrecognized tax benefits included the following:



	Total		Principal		Interest		Penalties
Year ended December 31, 2015	$’000		$’000		$’000		$’000

Balance at January 1, 2015	3,437		2,966		416		55
Additional uncertain tax provision identified during the year	78		62		7		9
Increase to uncertain tax provision on prior year positions	236		—		236		—
Decreases as a result of expiration of the statute of limitations	(35	)	(30	)	(2	)	(3	)
Foreign exchange	(38	)	(31	)	(1	)	(6	)

Balance at December 31, 2015	3,678		2,967		656		55

At December 31, 2016, the total amounts of unrecognized tax benefits included the following:



	Total		Principal		Interest		Penalties
Year ended December 31, 2016	$’000		$’000		$’000		$’000

Balance, January 1, 2016	3,678		2,967		656		55
Additional uncertain tax provision identified during the year	78		61		4		13
Increase to uncertain tax provision on prior year positions	4		—		4		—
Uncertain tax provisions settled during the year	(3,308	)	(2,668	)	(640	)	—
Decreases as a result of expiration of the statute of limitations	(124	)	(104	)	(2	)	(18	)
Foreign exchange	(10	)	(7	)	(1	)	(2	)

Balance at December 31, 2016	318		249		21		48

At December 31, 2014, the total amounts of unrecognized tax benefits included the following:



	Total		Principal		Interest		Penalties
Year ended December 31, 2014	$’000		$’000		$’000		$’000

Balance, January 1, 2014	2,988		2,935		7		46
Additional uncertain tax provision identified during the year	523		90		413		20
Increase to uncertain tax provision on prior year positions	49		49		—		—
Uncertain tax provisions settled during the year	(49	)	(49	)	—		—
Decreases as a result of expiration of the statute of limitations	(27	)	(20	)	(3	)	(4	)
Foreign exchange	(47	)	(39	)	(1	)	(7	)

Balance, December 31, 2014	3,437		2,966		416		55