18. Income Taxes | | | | | | | Six Months Ended June 30, | | | 2026 | | 2025 | | | | (in US$’000) | Current tax | | | | | PRC | | 126 | | 62,982 | Others (note) | | 10 | | 27 | | | 136 | | 63,009 | Deferred income tax expense/(benefit) | | | | | PRC | | 862 | | (61) | Others (note) | | 211 | | 214 | | | 1,073 | | 153 | Income tax expense | | 1,209 | | 63,162 |
Note: Others mainly include US and HK tax jurisdictions. After the prospective adoption of ASU 2023-09, the reconciliation of the Group’s reported income tax expense to the theoretical tax amount that would arise using the statutory tax rate of the Company against the Group’s income before income taxes and equity in earnings of equity investees is set out below. The statutory tax rate of HK is applied given that the Company satisfies the criteria for HK tax residency. | | | | | | | | Six Months Ended | | | | June 30, 2026 | | | | (in US$’000) | | Income before income taxes and equity in earnings of equity investees | | | | | | PRC | | 2,386 | | | | US and others | | 54 | | | | HK | | 11,213 | | | | Income before income taxes and equity in earnings of equity investees | | 13,653 | | | | Tax calculated at the statutory tax rate of the Company | | 2,253 | | 16.5 | % | Tax effects of: | | | | | | Different tax jurisdictions | | | | | | PRC | | | | | | Changes in valuation allowances | | 5,690 | | 41.7 | % | Preferential tax deduction | | (9,213) | | -67.5 | % | Preferential tax rate difference | | (2,014) | | -14.8 | % | Exchange difference | | 4,649 | | 34.1 | % | Share-based payments | | 622 | | 4.5 | % | Withholding tax on undistributed earnings of a PRC entity | | 379 | | 2.8 | % | Other items | | 480 | | 3.5 | % | US and other tax jurisdictions | | 212 | | 1.6 | % | Non-taxable interest income | | (3,856) | | -28.2 | % | Non-deductible professional expenses | | 539 | | 3.9 | % | Changes in valuation allowances | | 667 | | 4.9 | % | Others | | 801 | | 5.9 | % | Income tax expense | | 1,209 | | 8.9 | % |
The reconciliation of the Group’s reported income tax expense to the theoretical tax amount that would arise using the tax rates of the Company against the Group’s income before income taxes and equity in earnings of an equity investee is as follows: | | | | | Six Months Ended | | | June 30, 2025 | | | (in US$’000) | Income before income taxes and equity in earnings of an equity investee | | 495,592 | Tax calculated at the statutory tax rate of the Company | | 81,773 | Tax effects of: | | | Different tax rates applicable in different jurisdictions | | 2,115 | Tax valuation allowance | | 7,783 | Preferential tax rate difference | | (865) | Preferential tax deduction and credits | | (8,348) | Different tax rate applicable to gain from divestment of an equity investee | | (17,647) | Expenses not deductible for tax purposes | | 5,146 | Utilization of previously unrecognized tax losses | | (65) | Withholding tax on undistributed earnings of a PRC entity | | (66) | Income not subject to tax | | (5,027) | Temporary difference | | (1,762) | Others | | 125 | Income tax expense | | 63,162 |
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