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Taxation (Tables)

12 Months Ended

Dec. 31, 2020

Taxation

Schedule of the combined effects of EIT exemptions and tax rate reductions

The following table presents the combined effects of EIT exemptions and tax rate reductions enjoyed by the Group for the years ended December 31, 2018, 2019 and 2020 (in thousands except per share data):

​

​	​	​	​	​	​	​
​	​	For the year ended December 31,
​		2018		2019		2020
​	​	RMB	​	RMB	​	RMB
Aggregate amount of EIT exemptions and tax rate reductions		1,621,063		1,665,199		1,969,414
Earnings per share effect, basic		0.50		0.52		0.60
Earnings per share effect, diluted		0.50		0.51		0.59

​

Schedule of component of income tax expenses

The following table sets forth the component of income tax expenses of the Group for the years ended December 31, 2018, 2019 and 2020 (in thousands):

​

​	​	​	​	​	​	​
​	​	For the year ended December 31,
​		2018		2019		2020
​	​	RMB	​	RMB	​	RMB
Current tax expense		2,531,271		2,764,097		2,953,670
Deferred tax (benefit)/expense		(70,621)		150,629		88,179
Income tax expenses		2,460,650		2,914,726		3,041,849

Schedule of reconciliation of the differences between the statutory income tax rate and the Group's effective income tax rate

The following table presents a reconciliation of the differences between the statutory income tax rate and the Group’s effective income tax rate for the years ended December 31, 2018, 2019 and 2020:

​

​	​	​	​	​	​	​
​	​	For the year ended December 31,
​		2018		2019		2020
​	​	%	​	%	​	%
Statutory income tax rate		25.0		25.0		25.0
Permanent differences		(0.1)		(2.8)		(1.9)
Effect due to different tax rates applicable to overseas entities		2.8		(0.9)		(0.5)
Effect of lower tax rate applicable to Software Enterprises, Key Software Enterprise and HNTEs		(19.4)		(13.6)		(16.5)
Change in valuation allowance		7.8		4.9		6.8
Effect of withholding income tax		6.1		5.2		6.9
Effective income tax rate		22.2		17.8		19.8

Summary of net operating tax loss carry forwards

As of December 31, 2020, certain entities of the Group had net operating tax loss carry forwards as follows (in thousands):

​

​	​	​
​		RMB
Loss expiring in 2021		163,916
Loss expiring in 2022		833,766
Loss expiring in 2023		3,602,358
Loss expiring in 2024	​	3,220,185
Loss expiring after 2025		4,807,464
​		12,627,689

​

Schedule of tax impact of significant temporary differences that give rise to the deferred tax assets and liabilities

The following table presents the tax impact of significant temporary differences that give rise to the deferred tax assets and liabilities as of December 31, 2019 and 2020 (in thousands):

​

​	​	​	​	​
​		December 31,		December 31,
​	​	2019	​	2020
​	​	RMB	​	RMB
Deferred tax assets:	​	​	​	​
Deferred revenue, primarily for advanced payments from online games customers		484,637		624,565
Accruals		478,484		547,591
Depreciation of fixed assets		4,827		6,911
Amortization of intangible assets		9,360		6,623
Net operating tax loss carry forward		2,075,475		3,156,923
​		3,052,783		4,342,613
Less: valuation allowance		(2,148,879)		(3,255,854)
Total		903,904		1,086,759

​

​	​	​	​	​
​		December 31,		December 31,
​	​	2019	​	2020
​	​	RMB	​	RMB
Deferred tax liabilities:	​	​	​	​
Withholding income tax(d)		382,030		621,204
Others		—		92,235
Total		382,030		713,439

​

Schedule of movement of the aggregate valuation allowances for deferred tax assets

​

​	​	​	​	​	​	​
​		Balance at		Provision/(Write-off)		Balance at
​	​	January 1	​	for the year	​	December 31
​	​	RMB	​	RMB	​	RMB
2018		472,389	​	797,226	​	1,269,615
2019		1,269,615	​	879,264	​	2,148,879
2020		2,148,879	​	1,106,975	​	3,255,854

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure of the income tax exemptions and reductions which have been granted by taxing authorities for a specified period, applicable term of the exemptions and reductions, estimated dollar value of tax benefits, and per share benefits.

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Tabular disclosure of pertinent information, such as tax authority, amounts, and expiration dates, of net operating loss carryforwards, including an assessment of the likelihood of utilization.

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Tabular disclosure of valuation allowances to reduce deferred tax assets to net realizable value, including identification of the deferred tax asset more likely than not will not be fully realized and the corresponding amount of the valuation allowance.

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