5. CRITICAL ACCOUNTING JUDGEMENTS

5.1 Deferred tax

Source of estimation uncertainty

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences (as applicable) to the extent that it is probable that future taxable profits will be available against which the deferred tax assets can be used. The Group is required to make significant estimates in assessing whether future taxable profits will be available.

Future taxable profits are determined based on business plans for individual subsidiaries in the Group and the probable reversal of taxable temporary differences in future. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Such reductions are reversed when the probability of future taxable profits improves. The Group’s recognised deferred tax assets at the end of the current period amounted to R11 296 million (30 June 2023: R6 260 and 31 December 2023: R10 223 million).

MTN Mauritius recognised a deferred tax asset of R3 886 million (30 June 2023: R4 386 million and 31 December 2023: R4 386 million) mainly resulting from an assessed loss. The Group derecognised R500 million of the previously recognised deferred tax asset as a result of reducing the number of years considered in assessing the recoverability of the recognised deferred tax asset.

The Group considered the following factors in assessing whether it is probable that MTN Mauritius will have future taxable profits available against which the deferred tax asset can be used:

• It is unlikely that the circumstances that resulted in MTN Mauritius incurring assessed losses will recur indefinitely.
• Interest expense and foreign exchange exposures will reduce as MTN Mauritius repays its US$ denominated intercompany debt. The repayments are currently scheduled to occur in 2024 and 2026.
• Technical service fees from subsidiaries are expected to increase as more services are provided centrally.

Based on current business plans and stress scenarios, the Group expects to utilise the deferred tax asset in the next ten to 11 years.