Provision for zakat and tax Following is the movement in provision for zakat and tax during the year ended December 31:
2010
2009
Balance, beginning of the year
118,639 186,318
Amounts paid during the year
(26,986)
(91,002) (12,050)
Reversal of excess zakat and withholding tax provision
---
Income tax refund related to a subsidiary
1,411
783
Provisions for the year: Zakat
35,104
32,627
Tax: • Withholding tax
2,137
3,550
• Income tax (benefit) related to a subsidiary
(876)
(1,587)
Balance, end of the year
129,429 118,639
17. Hedging reserve for loans commision The Company uses the commission rates swaps and caps to avoid fluctuations in commission rates on the long-term loans. The change in the market value of the commission rate swaps are recorded in the hedging reserve which is included in the shareholders’ equity. 18. Statutory reserve In accordance with Saudi Arabian Regulations for Companies, the Company is required to transfer 10% of the net income to the statutory reserve until such reserve equals 50% of the paid-up capital. This reserve is not currently available for distribution to shareholders. The Board of Directors of the Company in its meeting held on January 18, 2010, approved to transfer the share premium reserve to the statutory reserve in accordance with Article (98) of the Saudi Arabian Regulations for Companies.
The National Shipping Company of Saudi Arabia Annual Report 2010
72
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