Income taxes (Tables)

12 Months Ended

Mar. 31, 2022

Schedule of Components of Income Before Income Tax Expense

The following table presents domestic and foreign components of income/(loss) before income tax expense (in thousands):


	As of March 31,
	2020		2021		2022

Domestic (South Africa)	$	30,464	$	14,443	$	12,254
Foreign	(9,648)		2,786		1,111
Income before income tax expense	$	20,816	$	17,229	$	13,365

Summary of Income Tax Expense

The following is a summary of the Company’s provision for income taxes for the years ended March 31, 2020, 2021 and 2022:


	As of March 31,
	2020		2021		2022

Current tax
Domestic (South Africa)	$	(4,261)	$	(5,768)	$	(4,346)
Foreign federal	—		(165)		(74)
Foreign state	(978)		(1,020)		(517)
Total Current	(5,239)		(6,953)		(4,937)
Deferred tax
Domestic (South Africa)	(4,744)		3,987		573
Foreign federal	55		83		(155)
Foreign state	99		249		101

Total deferred	(4,590)		4,319		519
Total income tax expense	$	(9,829)	$	(2,634)	$	(4,418)

Reconciliation of Income Tax Expense

The following table provides a reconciliation of the income tax expense calculated at the South African statutory tax rate, of 28%, to the income tax expense:


	As of March 31,
	2020		2021		2022

Income before income tax expense	$	20,816	$	17,229	$	13,365
Tax at South African statutory rate of 28%	5,828		4,824		3,742
Tax effect of:
– Income not subject to tax	—		(35)		(55)
– Non-deductible expenses (1)	235		929		626
– Non-deductible/(non-taxable) foreign exchange movements (2)	4,085		(3,401)		(419)
– Investment in subsidiaries	42		217		202
– Withholding tax	—		23		113
– Utilization of previously unrecognized tax losses (3)	(195)		(252)		53
– Foreign tax paid (4)	623		425		357
– Foreign tax rate differential	(213)		(241)		(115)
– Recognition of previously unrecognized tax losses	(11)		(73)		35
– Tax losses not recognized	75		92		314
– Under-provision prior years	138		298		(102)
– Tax incentives in addition to cost incurred (5)	(897)		(321)		(253)

– Transfer pricing imputation	65		21		67
– Tax rate change(6)	—		—		(226)
– Imputation of controlled foreign company income	119		100		83
– Other	(65)		28		(4)
Income tax expense	$	9,829	$	2,634	$	4,418

(1) These non-deductible expenses consist primarily of items of a capital nature and costs attributable to exempt income, primarily dividends from subsidiaries.

(2) The non-deductible/(non-taxable) foreign exchange movements arise as a result of the Company’s internal loan structures.

(3) The utilization of assessed losses arises mainly in Europe where historical assessed losses were being utilized.

(4) The foreign tax paid relates primarily to withholding taxes on revenue earned in jurisdictions where the Company does not have a jurisdictional presence.

(5) The tax incentives relate mainly to research and development allowances, as well as learnership allowances received in terms of the South African tax authorities. MiX Telematics International Proprietary Limited (“MiX International”), a subsidiary of the Company, is eligible for a 150% allowance for research and development spend in terms of section 11D of the South African Income Tax Act. During fiscal years prior to 2017, the additional 50% tax deduction was disallowed on certain projects because the South African Department of Science and Innovation (“DSI”) was of the view that the amounts claimed did not constitute qualifying expenditure. After a lengthy legal process, the DSI approved the additional deductions during fiscal year 2020, resulting in the recognition of a tax benefit of $0.5 million for fiscal year 2020 that previously was not considered probable.

(6) The tax rate change relates to MiX Telematics Europe Limited’s corporate tax rate change from 19% to 24%.

Schedule of Deferred Tax Assets and Liabilities

The Company’s net deferred tax liabilities consist of the following (in thousands):


	As of March 31,
	2021	2022

Deferred tax assets
Deferred revenue	1,224	1,432
Capital allowances for tax purposes	823	1,010
Accruals	5,037	4,936
Tax losses	1,456	2,000
Stock based compensation	540	554
Deferred foreign currency losses	407	338
Recurring commission liability	186	241
Lease liabilities	552	517

Other	166	39
Gross deferred tax assets	10,391	11,067
Set-off of deferred tax balances	(6,098)	(6,652)
Net deferred tax assets before valuation allowance	4,293	4,415
Less valuation allowance	(511)	(647)
Net deferred tax assets	3,782	3,768

Deferred tax liabilities
Capital allowances for tax purposes	3,494	3,629
Intangible assets	3,559	3,735
Prepaid expenses	133	232
Deferred foreign currency gains	6,186	5,673
Investment in subsidiaries	427	646
Deferred commissions	802	719
Lease assets	482	638
Other	202	352
Gross deferred tax liabilities	15,285	15,624
Set-off of deferred tax balances	(6,098)	(6,652)
Net deferred tax liabilities	9,187	8,972
Net deferred tax liability	(5,405)	(5,204)
The gross movement in net deferred tax assets/(liabilities) is as follows:
Opening balance	(8,328)	(5,405)

Foreign currency translation	(1,415)	(268)
Other comprehensive income	19	(50)


Statement of Income charge	4,319	519

Closing balance	(5,405)	(5,204)

Schedule of Corporate Tax Rates

Deferred tax at year-end has been recognized using the following corporate tax rates:


Region	2021		2022
South Africa	28	%	28	%
Australia	30	%	30	%
Brazil	34	%	34	%
Romania	16	%	16	%
Thailand	20	%	20	%
Uganda	30	%	30	%
United Arab Emirates	—	%	—	%
United Kingdom	19	%	24	%
United States of America	21	%	21	%