INCOME TAX CREDIT

12 Months Ended

Dec. 31, 2020

Disclosure of income tax credit [Abstract]

INCOME TAX CREDIT

9. INCOME TAX CREDIT

The tax credit based on the loss comprises:

	December 31, 2020 US$‘000			December 31, 2019 US$‘000			December 31, 2018 US$‘000
Current tax (credit)/expense
Irish Corporation tax		(480	)		(312	)		(258	)
Foreign taxes (a)		179			197			195
Adjustment in respect of prior years		(152	)		(50	)		(56	)
Total current tax credit		(453	)		(165	)		(119	)
Deferred tax credit (b)
Origination and reversal of temporary differences (see Note 15)		48			(625	)		(2,031	)
Origination and reversal of net operating losses (see Note 15)		(215	)		(216	)		1,625
Total deferred tax credit		(167	)		(841	)		(406	)
Total income tax credit on continuing operations in statement of operations		(620	)		(1,006	)		(525	)
Tax charge / (credit) on discontinued operations (see Note 10)		438			-			(590	)
					00
Total tax credit		(182	)		(1,006	)		(1,115	)

(a) In 2020, the foreign taxes relate primarily to Canada.

(b) In 2020, there was a deferred tax charge of US$53,000 (2019: credit of US$444,000; 2018: charge of US$369,000) recognised in respect of Ireland and a deferred tax credit of US$220,000 (2019: credit of US$397,000; 2018: credit of US$775,000) recognised in respect of overseas tax jurisdictions.

Effective tax rate	December 31, 2020			December 31, 2019			December 31, 2018
Loss before taxation – continuing operations  (US$‘000)		(6,633	)		(29,997	)		(23,183	)
As a percentage of loss before tax:
Current tax %		(6.83	)%		(0.55	)%		(0.51	)%
Total (current and deferred) %		(9.35	)%		(3.36	)%		(2.26	)%

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

	December 31, 2020			December 31, 2019			December 31, 2018
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)		24.13	%		13.21	%		15.76	%
Effect of tax rates on overseas earnings		(9.92	)%		(3.05	)%		(6.10	)%
Effect of Irish income taxable at higher tax rate		5.92	%		0.04	%		0.05	%
Adjustments in respect of prior years		(10.66	)%		(0.17	)%		0.94	%
R&D tax credits		(11.00	)%		(2.69	)%		(1.70	)%
Other items (c)		4.68	%		1.80	%		1.29	%
Effective tax rate		(9.35	)%		(3.36	)%		(2.26	)%

(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) Other items comprise items not chargeable to tax/expenses not deductible for tax purposes. In 2020, this mainly comprises 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. 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 and the movement in the exchangeable notes’ embedded derivatives value and the accretion of notional interest.

Unrecognised deferred tax assets – continuing operations	Effect in 2020 US$’000			Percentage effect in 2020			Effect in 2019 US$’000		Percentage effect in 2019
Increase in net operating losses arising in US		1,105			16.66	%		1,117		3.72	%
Temporary differences arising in US		-			-			129		0.43	%
(Decrease)/increase in net operating losses arising in Brazil		(502	)		(7.57	)%		608		2.03	%
Increase in net operating losses arising in Luxembourg		544			8.20	%		-		-
Increase in net operating losses arising in UK		2			0.03	%		-		-
Increase in net operating losses arising in Ireland		452			6.81	%		2,110		7.03	%
		1,601			24.13	%		3,964		13.21	%

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

	December 31, 2020 US$‘000			December 31, 2019 US$‘000			December 31, 2018 US$‘000
Rest of World – Ireland		296			(20,318	)		(9,590	)
Rest of World – Other		3,304			4,760			4,809
Americas		(10,233	)		(14,439	)		(18,402	)
		(6,633	)		(29,997	)		(23,183	)

At December 31, 2020, the Group had unutilised net operating losses for continuing operations as follows:

	December 31, 2020 US$‘000		December 31, 2019 US$‘000		December 31, 2018 US$‘000
Ireland		78,700		73,754		60,629
USA		-		1,034		2,382
Luxembourg		2,175		-		-
UK		10		-		-
Brazil		4,313		5,789		4,001
		85,198		80,577		67,012

At  December 31, 2020, the Group had unrecognised deferred tax assets in respect of unused tax losses and unused tax credits as follows:

	December 31, 2020 US$‘000		December 31, 2019 US$‘000		December 31, 2018 US$‘000
Ireland – unused tax losses		12,514		12,062		9,953
US – unused tax losses		-		3,291		2,174
US – unused tax credits		2,862		493		364
Luxembourg – unused tax losses		544		-		-
UK – unused tax losses		2		-		-
Brazil – unused tax losses		1,466		1,968		1,360
		18,810
Unrecognised deferred tax asset		17,388		17,814		13,851

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.