9.	INCOME TAX CREDIT

The tax credit based on the loss comprises:

	December 31, 2019 US$‘000			December 31, 2018 US$‘000			December 31, 2017 US$‘000
Current tax (credit)/expense
Irish Corporation tax		(312	)		(258	)		(51	)
Foreign taxes (a)		197			195			358
Adjustment in respect of prior years		(50	)		(56	)		150

Total current tax (credit)/expense		(165	)		(119	)		457

Deferred tax credit (b)
Origination and reversal of temporary differences (see Note 15)		(841	)		(2,031	)		(5,969	)
Origination and reversal of net operating losses (see Note 15)		-			1,625			4,298

Total deferred tax credit		(841	)		(406	)		(1,671	)

Total income tax credit on continuing operations in statement of operations		(1,006	)		(525	)		(1,214	)

Tax (credit)/charge on discontinued operations (see Note 10)		-			(590	)		323
		00
Total tax credit		(1,006	)		(1,115	)		(891	)

(a)

In 2019, the foreign taxes relate primarily to Canada.

(b)

In 2019, there was a deferred tax credit of US$444,000 (2018: charge of US$369,000; 2017: credit of US$170,000) recognised in respect of Ireland and a deferred tax credit of US$397,000 (2018: credit of US$775,000; 2017: credit of US$1,501,000) recognised in respect of overseas tax jurisdictions.

Effective tax rate	December 31, 2019 US$‘000			December 31, 2018 US$‘000			December 31, 2017 US$‘000
Loss before taxation		(29,997	)		(23,183	)		(39,875	)
As a percentage of loss before tax:
Current tax		(0.55	)%		(0.51	)%		1.14	%
Total (current and deferred)		(3.36	)%		(2.26	)%		(3.05	)%

The following table reconciles the applicable Republic of Ireland statutory tax rate to the effective total tax rate for the Group:

	December 31, 2019			December 31, 2018			December 31, 2017
Irish corporation tax		(12.5	)%		(12.5	)%		(12.5	)%
Effect of current year net operating losses and temporary differences for which no deferred tax asset was recognised (a)		13.21	%		15.76	%		12.05	%
Effect of tax rates on overseas earnings		(3.05	)%		(6.10	)%		(2.09	)%
Effect of Irish income taxable at higher tax rate		0.04	%		0.05	%		-
Adjustments in respect of prior years		(0.17	)%		0.94	%		0.38	%
Effect of changes in US tax code (b)		-			-			(1.89	)%
R&D tax credits		(2.69	)%		(1.70	)%		(0.17	)%
Other items (c)		1.80	%		1.29	%		1.17	%

Effective tax rate		(3.36	)%		(2.26	)%		(3.05	)%

(a)

The effect of current year net operating losses and temporary differences for which no deferred tax asset was recognised is analyzed further in the table below (see also Note 15). No deferred tax asset was recognised because there was no reversing deferred tax liability in the same jurisdiction reversing in the same period and no future taxable income in the same jurisdiction.

(b)

In 2017, a number of changes were made to the USA tax code, the most significant of which was the reduction in the federal corporation tax rate to 21%. This resulted in a once-off tax credit in 2017 of US$753,000 arising from the reduction in deferred tax balances due to the tax rate change, partially offset by the effect of mandatory deemed repatriation of certain deferred foreign earnings. The other changes to the USA tax code did not have a material impact on the Group.

(c)

Other items comprise items not chargeable to tax/expenses not deductible for tax purposes. In 2019, other items mainly comprise the tax audit settlement recorded in Selling, General and Administrative expenses (see also Note 6), which is not deductible for tax. Additionally, the movement in the exchangeable notes’ embedded derivatives value and the accretion of notional interest on the Loan Note’s host contract, both of which are exempt from deferred taxation recognition under IAS 12, Income Taxes.

Unrecognised deferred tax assets – continuing operations	Effect in 2019 US$’000		Percentage effect in 2019			Effect in 2018 US$’000			Percentage effect in 2018
Increase in net operating losses arising in US		1,117		3.72	%		2,174			9.38	%
Temporary differences arising in US		129		0.43	%		19			0.08	%
Decrease in net operating losses arising in Brazil		608		2.03	%		(20	)		(0.09	)%
Increase in net operating losses arising in Ireland		2,110		7.03	%		1,482			6.39	%

		3,964		13.21	%		3,655			15.76	%

The distribution of loss before taxes by geographical area was as follows:

	December 31, 2019 US$‘000			December 31, 2018 US$‘000			December 31, 2017 US$‘000
Rest of World – Ireland		(20,318	)		(9,590	)		(35,821	)
Rest of World – Other		4,760			4,809			4,809
Americas		(14,439	)		(18,402	)		(8,863	)

		(29,997	)		(23,183	)		(39,875	)

At December 31, 2019, the Group had unutilised net operating losses as follows:

	December 31, 2019 US$‘000		December 31, 2018 US$‘000		December 31, 2017 US$‘000
USA		1,034		2,382		7,737
Ireland		73,754		60,629		57,206
Brazil		5,789		4,001		4,060

		80,577		67,012		69,003

In the USA, the utilisation of net operating loss carryforwards is limited to future profits in the USA. All of the net operating losses for the USA arose prior to January 1, 2018 and have a maximum carryforward of 20 years. In respect of the US, US$994,000 will expire by December 31, 2036, and US$40,000 will expire by December 31, 2037.

At December 31, 2019, the Group had unrecognised deferred tax assets in respect of unused tax losses and unused tax credits as follows:

	December 31, 2019 US$‘000		December 31, 2018 US$‘000		December 31, 2017 US$‘000
Ireland – unused tax losses		12,062		9,953		8,471
US – unused tax losses		3,291		2,174		-
US – unused tax credits		493		364		345
Brazil – unused tax losses		1,968		1,360		1,380

Unrecognised deferred tax asset		17,814		13,851		10,196

The accounting policy for deferred tax is to calculate the deferred tax asset that is deemed recoverable, considering all sources for future taxable profits. The deferred tax assets in the above table have not been recognised due to uncertainty regarding the full utilization of these losses in the related tax jurisdiction in future periods. Only when it is probable that future profits will be available to utilize the forward losses or temporary differences is a deferred tax asset recognised. When there is a reversing deferred tax liability in that jurisdiction that reverses in the same period, the deferred tax asset is restricted so that it equals the reversing deferred tax liability.

The Group has US state credit carryforwards of US$624,000 at December 31, 2019 (2018: US$461,000; 2017: US$436,000). A deferred tax asset of US$493,000 (2018: US$364,000; 2017: US$345,000) in respect of US state credit carryforwards was not recognised due to uncertainties regarding future full utilisation of these state credit carryforwards in the related tax jurisdiction in future periods