Income tax

12 Months Ended

Mar. 31, 2015

Income Tax Disclosure [Abstract]

Income tax

8 Income tax

(a) The subsidiaries comprising the Group are subject to tax on an entity basis on income arising in or derived from Hong Kong and the PRC. The Company is not subject to income taxes in the British Virgin Islands.

Hong Kong Tax

The subsidiaries operating in Hong Kong are subject to the Hong Kong profits tax rate of 16.5% (2014: 16.5%). BIL has no assessable profits for the year ended March 31, 2015. Both BEL and BATL have assessable profits for the year ended March 31, 2015 and will be offset against prior year tax losses. Therefore, no current year provision for taxation has been made for the year ended March 31, 2015 (2014: $nil).

Since December 2005, BEL was under tax review by the local tax authorities for the profits tax assessment for the fiscal years ended March 31, 2000 to 2005. During the tax years under review, BEL was reporting profits tax with tax benefit of 50% reduction in tax payment due to import processing. However, the local tax authorities later believed that BEL was not entitled to this tax benefit as the PRC factory setup was no longer considered an import processing. Also, during the tax years under review, the local tax authorities believed that some profits of BEII were generated within the territory of Hong Kong and should be taxable in Hong Kong. After review and discussion between the Company and the local tax authorities, both parties agreed that the tax benefit of 50% reduction was not applicable and certain profits of BEII were taxable in Hong Kong during the tax years in review.

During the fiscal year ended March 31, 2015, the tax review case was closed and confirmed with the local tax authorities and the final tax and interest payable were approximately $1,545,000. After offsetting with the tax reserve certificates purchased for approximately $1,710,000, the Company obtained a refund of approximately $165,000.

PRC Tax

All subsidiaries registered in the PRC are subject to a tax rate of 25% (2014: 25%).

(b) Income is subject to taxation in the various countries in which the Company and its subsidiaries operate. The (loss) / income before income taxes by geographical location is analyzed as follows:

	2013		2014		2015
	$ in thousands		$ in thousands		$ in thousands
Hong Kong	(3,509	)	(1,495	)	(55	)
PRC	2,832		1,337		148
Others	(48	)	(63	)	(20	)
Total	(725	)	(221	)	73

Others mainly include the (loss) / income from BVI.

(c) Income tax (expense) / credit comprises the following:

	2013		2014	2015
	$ in thousands		$ in thousands	$ in thousands
Deferred income tax	2		—	—
Current income tax expense	(31	)	—	(13	)
Income tax credit	—		—	1,050
Total income tax (expense) / credit	(29	)	—	1,037

The components of the income tax (expense) / credit by geographical location are as follows:

	2013		2014	2015
	$ in thousands		$ in thousands	$ in thousands
Hong Kong	(29	)	—	1,050
PRC	—		—	(13	)
Others	—		—	—
Total	(29	)	—	1,037

At the end of the accounting period, the income tax liabilities are as follows:

	2014	2015
	$ in thousands	$ in thousands
Non-current	2,595	—
Current	7	7
Total	2,602	7

(d) Deferred tax assets comprise the following:

	2014			2015
	$ in thousands			$ in thousands
Tax loss carry forwards		853			4,459
Less: Valuation allowance		(853	)		(4,459	)
		—			—

As of March 31, 2014 and 2015, the Company had accumulated tax losses amounting to approximately $3,600,000 and $25,327,000 (the tax effect thereon is $853,000 and $4,459,000), respectively, subject to the final agreement by the relevant tax authorities, which may be carried forward and applied to reduce future taxable income which is earned in or derived from Hong Kong and other countries. Realization of deferred tax assets associated with tax loss carry forwards is dependent upon generating sufficient taxable income prior to their expiration. A valuation allowance is established against such tax losses when management believes it is more likely than not that a portion may not be utilized. As of March 31, 2015, the Company’s accumulated tax losses of $2,189,000 will expire in 2018, $164,000 will expire in 2019 and $951,000 will expire in 2020.

(e) Changes in valuation allowance are as follows:

	2013		2014	2015
	$ in thousands		$ in thousands	$ in thousands
Balance, April 1	784		700	853
(Credited) / charged to income tax expense	(84	)	153	3,606
	──────		──────	──────
Balance, March 31	700		853	4,459
	══════		══════	══════

(f) The actual income tax (expense) / credit attributable to earnings for the fiscal years ended March 31, 2013, 2014 and 2015 differed from the amounts computed by applying the Hong Kong statutory tax rate in accordance with the relevant income tax law as a result of the following:

	2013		2014		2015
	$ in thousands		$ in thousands		$ in thousands
(Loss) / income before income taxes	(725	)	(221	)	73
Income tax benefit / (expense) on pretax income at statutory rate	120		36		(12	)
Effect of different tax rates of subsidiary operating in other jurisdictions	(249	)	(28	)	(233	)
Profit not subject to income tax	3,600		1,129		542
Expenses not deductible for income tax purposes	(3,469	)	(1,137	)	(336	)
(Decrease) / increase in valuation allowance	(84	)	153		3,606
Reversal of provision from conclusion of tax review with tax authorities	—		—		2,595
Tax expense from conclusion of tax review with tax authorities	—		—		(1,545	)
Under provision of prior year	(31	)	—		—
Utilization of tax losses not previously recognized / (tax losses  not yet recognized)	84		(153	)	(3,580	)
Total income tax (expense) / credit	(29	)	—		1,037

The statutory rate of 16.5% used above is that of Hong Kong, where the Company’s main business is located.

(g) The Company complies with ASC 740 and assessed the tax position during the fiscal year ended March 31, 2015 and concluded that such prior year uncertain income tax liability was no longer required. Included in the total tax liabilities of $7,000 (2014: $2,602,000), the uncertain tax liabilities in respect of this for the year ended March 31, 2015 amounted to $nil (2014: $2,595,000).

The Company’s accounting policy is to treat interest and penalties as components of income taxes. As of March 31, 2015, the Company had no accrued penalties related to uncertain tax positions (2014: $994,000).