Constance Hotels Services Limited | Annual Report 2025

167 ANNUAL REPORT 2025

Notes to the Financial Statements Year ended December 31, 2025

Notes to the Financial Statements Year ended December 31, 2025

2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (CONT’D) 2.2 Material accounting policies (cont’d)

2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (CONT’D) 2.2 Material accounting policies (cont’d)

(m) Current and deferred income tax (cont’d)

(n) Retirement benefit obligations

Deferred tax (cont’d)

Defined benefit plan

The Group and the Company offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

A defined benefit plan is a pension plan that is not a defined contribution plan. Typically, defined benefit plans define an amount of pension benefit that an employee will receive on retirement usually dependent on one or more factors such as age, year of service and compensation. The liability recognised in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest) is recognised immediately in other comprehensive income in the period in which they occur. Remeasurements recognised in other comprehensive income shall not be reclassified to profit or loss in subsequent period. The Group determines the net interest expense/(income) on the net defined benefit liability/(asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability/(asset), taking into account any changes in the net defined liability/(asset) during the period as a result of contributions and benefits payments. Net Interest expense/(income) is recognised in profit or loss.

Value Added Tax

Revenues, expenses and assets are recognised net of the amount of value added tax except where:

• t he value added tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable, and receivables and payables that are stated with the amount of value added tax included; or • t he net amount of value added tax recoverable from, or payable to, the taxation authority is included as part of accounts receivables or payables in the statements of financial position.

Corporate Climate Responsibility Levy

In his National Budget on 7 June 2024, the Mauritian Finance Minister announced the introduction of a Corporate Climate Responsibility Levy (“CCRL”),equivalent to 2% of the company’s profits, for companies with a yearly turnover of more than MUR 50 million.

Service costs comprising current service cost, past service cost, as well as gains and losses on curtailments and settlements are recognised immediately in profit or loss.

Gratuity on retirement

Section 41(iii) of the Financial (Miscellaneous Provisions) Act 2024 (“FMPA 2024”) gave effect to the CCRL and its effective date is the year of assessment 2024/2025.

The employee benefit scheme is unfunded and its liability relates to employees who are entitled to statutory benefits prescribed under parts VIII and IX of the Workers’ Rights Act 2019 (WRA). The latter provides for a lump sum on withdrawal, at retirement or death, whichever occurs earlier, based on final salary and years of service. The assets of the plan are invested in the Portable Retirement Gratuity Fund (PRGF). Pension costs are assessed using the projected unit credit method. Actuarial gains and losses are recognised immediately in the statement of profit or loss and other comprehensive income under the heading “other comprehensive income”. Past service costs are recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line basis over the average period until the benefits become vested.

The CCRL also applies to any Mauritian tax resident partnership. The CCRL is computed on the taxable profit of the company and is specifically considered to be an income tax under section 41(a)(i)(A) of the FMPA 2024.

Fair share contribution

The Fair Share Contribution (“FSC”) was introduced by the Finance Act 2025 and applies to income derived from 1 July 2025 to 30 June 2028. Although legislated under the Value Added Tax Act, the FSC is calculated on chargeable income rather than on supplies, and therefore operates in substance as a tax on profits. In accordance with IAS 12, the FSC is accounted for as an income tax. The FSC is payable quarterly and is measured at 5% of chargeable income. Current FSC is recognised in profit or loss within income tax expense when the related taxable profit arises, and quarterly instalments are recorded as current tax liabilities when due. Deferred FSC is recognised for temporary differences to the extent it is probable that these will affect FSC obligations during the period in which the FSC applies.

The employee benefit obligation recognised in the statement of financial position represents the present value of the defined benefit obligation.

The Group carries out an actuarial valuation every year.