2020 INTEGRATED REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) for the year ended 31 December 2020 28. FINANCE COSTS Group 2020 2019 R’m R’m Interest expense on borrowings 14 17 Notional interest expense on lease liabilities 5 7 Total finance costs 19 24 29. TAX Group 2020 2019 R’m R’m Current income tax 123 243 – Current year tax 132 242 – Prior years (overprovision)/underprovision (9) 1 Dividend withholding tax on deemed dividends 99 93 222 336 Deferred tax 250 45 Total tax 472 381 Tax on the Group’s profit before tax differs from the theoretical amount that would arise using the tax rate applicable to South African/Namibian companies as follows: Profit before movement in policy liabilities 2 175 2 804 Tax calculated at domestic tax rates applicable to profits/(losses) in South Africa/Namibia 626 797 Tax effect of income not subject to tax (1 703) (1 739) Tax effect of non-deductible expenses 1 503 1 262 Tax effect of tax rate on Dividend Withholding Tax on deemed dividends being different to tax rate on the individual policyholder fund (“IPF”) 50 47 Prior years (overprovision)/underprovision (9) 1 Tax effect of CF tax rate being different to IPF tax rate 5 13 Total tax per Statement of Profit or Loss and Other Comprehensive Income 472 381 The applicable tax rate was 28% (2019: 28%) for South African companies and 32% (2019: 32%) for Professional Provident Society Insurance Company (Namibia) Limited. Professional Provident Society Insurance Company Limited has five separate tax funds: the individual policyholders’ fund (taxed at 30%), the Company policyholders’ fund (taxed at 28%), the untaxed policyholder's fund (not taxed), the risk-policy fund (taxed at 28%) and the corporate fund (taxed at 28%). The tax reconciliation is done on total tax on all funds. The Professional Provident Society Holdings Trust is taxed at 45%. Dividend withholding tax is payable on dividends received in the individual policy fund. The Group has accumulated losses of R531.9 million (2019: R327.2 million) available in certain subsidiaries for offset against future taxable income in those subsidiaries. 172 | PPS INTEGRATED REPORT 2020