Annual Report 2019

China Merchants China Direct Investments Limited Annual Report 2019 118 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2019 22. DEFERRED TAXATION The following is the deferred tax liability recognised by the Group and movements thereon during the current and prior years: Unrealised capital gains for Undistributed earnings investments of PRC (Note) subsidiaries Total US$ US$ US$ Balance at 1 January 2018 97,975,045 24,316,433 122,291,478 Credited to profit or loss for the year (29,331,860) (4,804,954) (34,136,814) Exchange differences (3,468,197) (1,165,652) (4,633,849) Balance at 31 December 2018 65,174,988 18,345,827 83,520,815 Charged to profit or loss for the year 29,541,251 3,845,576 33,386,827 Exchange differences (1,351,499) (297,164) (1,648,663) Balance at 31 December 2019 93,364,740 21,894,239 115,258,979 Note: Deferred taxation has been provided for in the consolidated financial statements in respect of the unrealised capital gains for investments based on the tax rate of capital gain tax in the PRC or local income tax rate in Hong Kong or the PRC, whichever is applicable. At the end of the reporting period, the Group has unused tax losses of US$3.61 million (2018: US$6.08 million) available for offsetting against future profits. Included in unrecognised tax losses are losses of US$0.37 million (2018: US$2.85 million) that will expire in 2024. Other tax losses may be carried forward indefinitely. No deferred tax asset has been recognised in relation to tax losses due to the unpredictability of future relevant taxable profit against which the tax losses can be utilised and deductible temporary difference is nil (2018: US$0.27 million).