8 Taxation

Figures in million20092008
 SA Rands
Current taxation  
   Mining tax (1)153
   Non-mining tax (2)3331
   Under provision prior year3243
(note 26)21874
Deferred taxation  
   Temporary differences (3)534(159)
   Unrealised non-hedge derivatives and other commodity contracts(1,451)841
   Change in estimated deferred tax rate (4)(156)62
   Change in statutory tax rate(70)
(note 24)(1,073)674
   
 (855)748
Tax reconciliation  
A reconciliation of the effective tax rate charged in the income statement to the prevailing mining and non-mining tax rate is set out in the following table:  
 %%
Effective tax rate6735
Disallowable items(4)5
Exchange variation and translation adjustments(6)
Dividends received(15)(9)
Impact of prior year under provisions22
Change in estimated deferred tax rate (4)(12)3
Change in statutory tax rate(3)
Other32
Estimated corporate tax rate (5)3535
(1)There was no mining tax charge in 2008 as the mining income was primarily offset by the non-mining losses from the accelerated non-hedge derivative buy-backs.
(2)Non-mining income is taxed at the higher non-mining tax rate of 35% (2008: 35%) as the company has elected to be exempt from STC. Companies who elected to be subject to STC are taxed at the lower company tax rate of 28% (2008: 28%) for non-mining taxation purposes.
(3)Included in temporary differences is a tax credit on the derecognition of tangible assets and impairments in respect of held for sale assets of R61m (2008: R75m).
(4)The mining operations are taxed on a variable rate that increases as profitability increases. The tax rate used to calculate deferred tax is based on the company’s current estimate of future profitability when temporary differences will reverse. Depending on the profitability of the operations, the tax rate can consequently be significantly different from year to year. The change in the estimated deferred tax rate at which the temporary differences will reverse amounts to a tax credit of R156m (2008: tax charge of R62m).
(5)Mining tax on mining income is determined according to a formula based on profit and revenue from mining operations. The company has elected to be exempt from STC and is taxed at a higher rate of company tax for mining and non-mining income tax purposes.

All mining capital expenditure is deducted to the extent that it does not result in an assessed loss and depreciation is ignored when calculating the mining income. Capital expenditure not deducted from mining income is carried forward as unredeemed capital to be deducted from future mining income. The company operates under two tax paying operations, Vaal River Operation and West Wits Operation. Under ring-fencing legislation, each operation is treated separately and deductions can only be utilised against income generated by the relevant tax operation.

The formula for determining the mining tax rate is:
Y = 43 – 215/X (2008: Y = 43 – 215/X)
where Y is the percentage rate of tax payable and X is the ratio of mining profit net of any redeemable capital expenditure to mining revenue expressed as a percentage.

The maximum statutory mining tax rate is 43% (2008: 43%), non-mining statutory tax rate 35% (2008: 35%) and statutory company tax rate 28% (2008: 28%).