Annual Report 2022

137 China Merchants China Direct Investments Limited Annual Report 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2022 21. 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 investments (Note) Undistributed earnings of PRC subsidiaries Total US$ US$ US$ Balance at 1 January 2021 130,029,330 24,290,592 154,319,922 Charged to profit or loss for the year 13,974,354 2,769,098 16,743,452 Exchange differences 3,363,530 600,837 3,964,367 Balance at 31 December 2021 147,367,214 27,660,527 175,027,741 Credited to profit or loss for the year (38,855,419) (5,684,635) (44,540,054) Exchange differences (11,359,942) (2,371,833) (13,731,775) Balance at 31 December 2022 97,151,853 19,604,059 116,755,912 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$16.93 million (2021: US$6.18 million) available for offsetting against future profits. Included in unrecognised tax losses are losses of US$10.42 million (2021: Nil) that will expire in 2027. Other 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 (2021: Nil).