Manulife US REIT - Annual Report 2021

ANNUAL REPORT 2021 179 For the year ended 31 December 2021 Notes to the Financial Statements 18 FINANCE EXPENSES Group 2021 2020 US$’000 US$’000 Interest expense on loans and borrowings 26,890 27,724 Amortisation of upfront debt-related transaction costs 1,711 1,689 Dividends on preferred units 136 16 Redemption of preferred units 23 − Commitment and financing fees 385 310 29,145 29,739 19 TAX EXPENSE/(INCOME) Group 2021 2020 US$’000 US$’000 Current tax expense Withholding tax − 12 Income tax 167 719 167 731 Deferred tax expense/(income) Movement in temporary differences 978 (23,430) 1,145 (22,699) Reconciliation of effective tax rate Net income/(loss) for the year before tax 40,558 (65,983) Tax calculated using Singapore tax rate of 17% (2020: 17%) 6,895 (11,217) Effect of different tax rate in foreign jurisdictions (3,388) (13,504) Income not subject to tax (2,362) − Expenses not deductible for tax purposes − 2,022 1,145 (22,699) Provision for Taxation Uncertainties exist with respect to the interpretation of complex tax regulations in the jurisdictions in which the Group operates and the amount and timing of future taxable income. Given the span of tax regulations which may apply to the various taxable entities or persons within the Group, the cross-border and long-term nature and complexity of the contractual arrangements and the conditions to the tax rulings which have been obtained, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax provisions recorded or require new or additional tax provisions to be recorded. The Group establishes provisions, based on reasonable estimates, for anticipated tax liabilities or possible consequences of audits by the tax authorities of the respective jurisdictions in which it operates. The amount of such provisions is based on various factors, such as differing interpretations of tax regulations between the taxable entity or person involved and the relevant tax authority and anticipated future changes in the tax laws that may have a direct impact on any tax ruling or favourable tax treatment relied upon. Such instances may arise on a wide variety of issues depending on the conditions prevailing in the domicile of the respective entity or person involved.