Annual report pursuant to Section 13 and 15(d)

Deferred Tax Assets

v3.20.2
Deferred Tax Assets
 12 Months Ended
Mar. 31, 2020
Deferred Tax Assets, Net [Abstract]  
Deferred Tax Assets

The Company is subject to taxation in the Russian Federation, Kazakhstan, Kyrgyzstan, Cyprus, Ukraine, Uzbekistan, Germany and the United States of America.

 

The tax rates used for deferred tax assets and liabilities for the years ended March 31, 2020 and 2019, were 21% for the U.S., 20% for the Russian Federation, Kazakhstan, Kyrgyzstan, 31% for Germany, 12.5% for Cyprus, 18% for Ukraine and 12% for Uzbekistan.

 

Deferred tax assets and liabilities of the Company are comprised of the following:

 

    March 31, 2020     March 31, 2019  
             
Deferred tax assets:            
Tax losses carryforward   $ 1,691     $ 2,376  
Revaluation on trading securities     72       2,095  
Accrued liabilities     7       35  
Stock compensation expenses     4       -  
Valuation allowance     (677 )     (3,241 )
Deferred tax assets   $ 1,097     $ 1,265  
                 
Deferred tax liabilities:                
Revaluation on trading securities   $ 513     $ -  
Other liabilities      14        -  
                 
Deferred tax liabilities   $ 527     $ -  
                 
Net deferred tax assets   $ 570     $ 1,265  

 

The Company is subject to the U.S. federal income taxes at a rate of 21%. The reconciliation of the provision for income taxes at the 21% tax rate compared to the Company’s income tax expense as reported is as follows:

 

   

Year ended

March 31, 2020

    

Year ended

March 31, 2019

  
             
Profit before tax at 21% and 34%   $ 5,908     $ 1,788  
Global Intangible Low Taxed Income     4,803       573  
Permanent differences     793       430  
Stock based compensation     551       309  
Valuation allowance     416       808  
Nontaxable gains     401       (3,811 )
Other differences     20       418  
Losses carried forward adjustment     (154 )     1,678  
Provision for impairment losses     (295 )     386  
Foreign tax rate differential     (2,938 )     (1,211 )
Foreign tax credit     (3,503 )     -  
Income tax provision   $ 6,002     $ 1,368  

 

The income tax expense comprises:

 

   

Year ended

March 31, 2020

    

Year ended

March 31, 2019

  
Current income tax charge   $ 5,307     $ 1,817  
Deferred income tax charge/(benefit)     695       (449 )
Income tax provision   $ 6,002     $ 1,368  

 

During the years ended March 31, 2020 and 2019, the Company realized net income before income tax of $28,132 and $8,515, respectively. During the same periods, the Company’s effective tax rate was equal to 21.34% and 16.07%, respectively. This increase in income tax expense was primarily attributable to a $43,231 increase in commissions earned by Freedom CY during the fiscal year ended March 31, 2020.

 

Tax losses carryforward as of March 31, 2020 was $1,691 and is subject to income tax in US, Russia, Ukraine and Uzbekistan.