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Income Taxes

12 Months Ended

Dec. 31, 2020

Income tax expense (benefit) [Abstract]

Income Taxes

41.

Income Taxes

(1)

Income tax expense (benefit) for the years ended December 31, 2018, 2019 and 2020 are as follows:


		2018			2019			2020
		In millions of won
Current income tax expense
Payment of income tax	￦		378,715			538,223			671,179
Adjustment in respect of prior years due to change in estimate			(195,648	)		(176,441	)		(63,756	)
Current income tax directly recognized in equity			101,528			(53,302	)		51,486
Effect of change in accounting policy			1,780			—			—

			286,375			308,480			658,909

Deferred tax expense (benefit)
Generation and realization of temporary differences	￦		(495,658	)		(636,984	)		(77,985	)
Changes of unrecognized tax losses, tax credit and temporary differences for prior periods			(28,509	)		(22,469	)		(10,471	)
Changes in deferred tax on tax losses carryforwards			(572,305	)		(582,011	)		296,070
Tax credit carryforwards			(16,224	)		(71,306	)		32,541
Amount due to change in tax rate or regulations			—			1,987			—

			(1,112,696	)		(1,310,783	)		240,155

Income tax expense (benefit)	￦		(826,321	)		(1,002,303	)		899,064

(2)

Reconciliation between actual income tax expense (benefit) and amount computed by applying the statutory tax rate to profit (loss) before income taxes for the years ended December 31, 2018, 2019 and 2020 are as follows:


		2018			2019			2020
		In millions of won
Profit (loss) before income tax	￦		(2,000,819	)		(3,265,838	)		2,991,533

Income tax expense (benefit) computed at applicable tax rate(*1)			(550,225	)		(898,105	)		822,672
Adjustments
Effect of applying gradual tax rate			(1,408	)		10,362			(10,362	)
Effect of non-taxable income			(1,705	)		(9,990	)		(13,593	)
Effect of non-deductible expenses			40,151			12,197			46,776
Effect of tax losses that are not recognized as deferred tax asset			2,086			57,490			—
Effects of tax credits and deduction			(39,471	)		(76,983	)		(63,753	)
Recognition (reversal) of unrecognized deferred tax asset, net			(28,509	)		(22,469	)		(10,471	)
Effect of change in deferred tax due to change in tax rate			261			16,848			(17,590	)
Deduction of deferred tax assets			—			—			55,682
Deferred tax related to investments in subsidiaries, associates and joint ventures			(52,618	)		147,598			102,137
Others, net			765			(62,810	)		51,322

			(80,448	)		72,243			140,148
Adjustment in respect of prior years due to change in estimate			(195,648	)		(176,440	)		(63,756	)

Income tax expense (benefit)	￦		(826,321	)		(1,002,302	)		899,064

Effective tax rate			(	*2)		(	*2)		30.05	%

(*1)

Applicable tax rate is 27.5% as of December 31, 2018, 2019 and 2020.

(*2)

The effective tax rate for the year ended December 31, 2018 and 2019 is not calculated due to income tax benefit.

(3)

Income tax directly adjusted to equity (except for accumulated other comprehensive income (loss)) for the years ended December 31, 2018, 2019 and 2020 are as follows:

2018

2019

2020

In millions of won

Dividends of hybrid bond

￦

4,273

3,432

4,273

(4)

Income tax recognized as other comprehensive income (loss) for the years ended December 31, 2018, 2019 and 2020 are as follows:


		2018			2019			2020
		In millions of won
Income tax recognized as other comprehensive income (loss)
Gain (loss) on valuation of financial assets at fair value through other comprehensive income	￦		35,798			(4,217	)		19,447
Net change in the unrealized fair value of derivatives using cash flow hedge accounting			6,639			(15,642	)		(47,231	)
Remeasurement of defined benefit liability			53,703			(40,235	)		14,972
Investments in associates			6,592			4,275			35,714
Others			(5,477	)		(914	)		24,311

	￦		97,255			(56,733	)		47,213

(5)

Changes in deferred tax assets (liabilities) recognized in the consolidated statements of financial position for the years ended December 31, 2019 and 2020 are as follow:


		2019
		Beginning balance			Amounts recognized in profit or loss			Amount recognized in other comprehensive income (loss)			Amounts recognized directly in equity			*Others ()**			Ending balance
		In millions of won
Deferred tax on temporary differences
Employee benefits	￦		594,541			94,541			(40,235	)		—			—			648,847
Cash flow hedge			39,461			(23,977	)		(15,642	)		(841	)		—			(999	)
Investments in associates and subsidiaries			(8,666,871	)		(3,131	)		4,275			—			—			(8,665,727	)
Property, plant and equipment			(6,522,778	)		(592,440	)		—			—			—			(7,115,218	)
Finance lease	￦		(453,074	)		292,631			—			—			—			(160,443	)
Intangible assets			6,055			(20,232	)		—			—			(41,729	)		(55,906	)
Financial assets at fair value through profit or loss			19			322			—			—			—			341
Financial assets at fair value through other comprehensive income			25,576			(3,114	)		(4,217	)		—			—			18,245
Deferred revenue			219,742			(6,739	)		—			—			—			213,003
Provisions			4,800,946			655,973			—			—			—			5,456,919
Doubtful receivables			59			—			—			—			—			59
Other financial liabilities			39,493			(4,402	)		—			4,273			—			39,364
Gains or losses on foreign exchange translation			27,080			30,881			—			—			—			57,961
Allowance for doubtful accounts			58,756			(1,149	)		—			—			—			57,607
Accrued income			(2,914	)		(1,462	)		—			—			—			(4,376	)
Special deduction for property, plant and equipment			(211,746	)		(3,627	)		—			—			—			(215,373	)
Others			1,053,146			290,484			(914	)		—			—			1,342,716

			(8,992,509	)		704,559			(56,733	)		3,432			(41,729	)		(8,382,980	)

Deferred tax on unused tax losses and tax credit
Unused tax losses			554,457			557,356			—			—			—			1,111,813
Excess of donation limit			17,848			18,847			—			—			—			36,695
Tax credit			36,656			70,870			—			—			—			107,526

			608,961			647,073			—			—			—			1,256,034

	￦		(8,383,548	)		1,351,632			(56,733	)		3,432			(41,729	)		(7,126,946	)

(*)

‘Others’ include amount changed due to business combination. (see Note 51)


		2020
		Beginning balance			Amounts recognized in profit or loss			Amount recognized in other comprehensive income (loss)			Amounts recognized directly in equity		Ending balance
		In millions of won
Deferred tax on temporary differences
Employee benefits	￦		648,847			14,566			26,374			—		689,787
Cash flow hedge			(999	)		63,817			(47,231	)		—		15,587
Investments in associates and subsidiaries			(8,665,727	)		(38,002	)		35,714			—		(8,668,015	)
Property, plant and equipment			(7,115,218	)		(598,231	)		—			—		(7,713,449	)
Finance lease			(160,443	)		(50,977	)		—			—		(211,420	)
Intangible assets			(55,906	)		24,740			—			—		(31,166	)
Financial assets at fair value through profit or loss			341			(328	)		—			—		13
Financial assets at fair value through other comprehensive income			18,245			258			19,447			—		37,950
Deferred revenue			213,003			(13,302	)		—			—		199,701
Provisions			5,456,919			459,884			—			—		5,916,803
Doubtful receivables			59			(59	)		—			—		—
Other financial liabilities			39,364			(13,238	)		—			4,273		30,399
Gains or losses on foreign exchange translation			57,961			(69,596	)		—			—		(11,635	)
Allowance for doubtful accounts			57,607			(1,478	)		—			—		56,129
Accrued income			(4,376	)		13,320			—			—		8,944
Special deduction for property, plant and equipment			(215,373	)		(10,978	)		—			—		(226,351	)
Others			1,342,716			150,326			12,909			—		1,505,951

			(8,382,980	)		(69,278	)		47,213			4,273		(8,400,772	)

Deferred tax on unused tax losses and tax credit
Unused tax losses			1,111,813			(218,739	)		—			—		893,074
Excess of donation limit			36,695			(1,514	)		—			—		35,181
Tax credit			107,526			(2,110	)		—			—		105,416

			1,256,034			(222,363	)		—			—		1,033,671

	￦		(7,126,946	)		(291,641	)		47,213			4,273		(7,367,101	)

(6)

Deferred tax assets (liabilities) recognized in the consolidated statements of financial position as of December 31, 2019 and 2020 are as follows:


		2019			2020
		In millions of won
Deferred tax assets	￦		1,437,829			1,733,146
Deferred tax liabilities			(8,564,775	)		(9,100,247	)

	￦		(7,126,946	)		(7,367,101	)

(7)

Details of deductible temporary differences, tax losses and unused tax credits for which no deferred tax assets were recognized as of December 31, 2019 and 2020 are as follows:

2019

2020

In millions of won

Deductible temporary differences

￦

541,449

1,405,621