Income Taxes

12 Months Ended

Dec. 31, 2024

41.	Income Taxes

(1)	Income tax expense (benefit) for the years ended December 31, 2022, 2023 and 2024 are as follows:


		2022			2023			2024

		In millions of won
Current income tax expense
Payment of income tax	￦		563,681			621,957			1,301,275
Adjustment in respect of prior years due to change in estimate			48,374			(32,100	)		(44,892	)
Current income tax directly recognized in equity			(350,348	)		93,705			(128,337	)

			261,707			683,562			1,128,046

Deferred tax benefit
Generation and realization of temporary differences			(564,801	)		(1,845,236	)		(1,561,484	)
Reclassified from equity to loss			(4,964	)		—			—
Changes of unrecognized tax losses, tax credit and temporary differences for prior periods			(38,708	)		(15,244	)		(7,740	)
Changes in deferred tax on tax losses carryforwards			(9,175,755	)		(1,650,017	)		2,012,537
Tax credit carryforwards			34,019			(16,734	)		72,371
Amount due to change in tax rate or regulations			73,991			5,836			(9,169	)

			(9,676,218	)		(3,521,395	)		506,515

Income tax expense (benefit)	￦		(9,414,511	)		(2,837,833	)		1,634,561

(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, 2022, 2023 and 2024 are as follows:


		2022			2023			2024

		In millions of won
Profit (loss) before income tax	￦		(33,843,619	)		(7,553,977	)		5,256,529

Income tax expense (benefit) computed at applicable tax rate (*1)			(9,306,995	)		(1,936,840	)		1,363,018
Adjustments
Effect of applying gradual tax rate			(10,362	)		(10,362	)		(10,362	)
Effect of non-taxable income			(9,471	)		(26,993	)		(86,442	)
Effect of non-deductible expenses			39,663			39,411			28,712
Effect of tax losses that are not recognized as deferred tax assets			19,275			—			(797	)
Effects of tax credits and deduction			(98,684	)		(53,724	)		(54,364	)
Reversal of unrecognized deferred tax assets, net			(38,708	)		(15,244	)		(7,740	)
Effect of change in deferred tax due to change in tax rate			393,416			211,736			(11,985	)
Deduction of deferred tax assets			(85,514	)		29,095			—
Deferred tax related to investments in subsidiaries, associates and joint ventures			(375,064	)		(1,063,007	)		447,833
Others, net			9,559			20,195			11,580

			(155,890	)		(868,893	)		316,435
Adjustment in respect of prior years due to change in estimate			48,374			(32,100	)		(44,892	)

Income tax expense (benefit)	￦		(9,414,511	)		(2,837,833	)		1,634,561

Effective tax rate			(* 2	)		(* 2	)		(* 2	)

(*1)

Applicable tax rates are 26.5%, 25.64% and 25.93% as of December 31, 2022, 2023 and 2024, respectively.

(*2)

The effective tax rate for the year ended December 31, 2022, 2023 is not

calculated due to the resulting income tax benefit and the average effective tax rate for the year ended December 31, 2024 is

31.10%.

(3)	Income tax directly adjusted to equity (except for accumulated other comprehensive income (loss)) for the years ended December 31, 2022, 2023 and 2024 are as follows:


		2022		2023		2024

		In millions of won
Dividends of hybrid bond	￦		4,149		—		—
Disposal of subsidiaries			406		—		—

	￦		4,555		—		—

(4)	Income tax recognized as other comprehensive income (loss) for the years ended December 31, 2022, 2023 and 2024 are as follows:


		2022			2023			2024

		In millions of won
Income tax recognized as other comprehensive income (loss)
Loss on valuation of financial assets at fair value through other comprehensive income	￦		(31,416	)		(10,624	)		(61,807	)
Net change in the unrealized fair value of derivatives using cash flow hedge accounting, net of tax			40,390			4,863			(8,435	)
Remeasurement of defined benefit liability			(322,489	)		133,134			139,566
Investments in associates			(66,677	)		(40,213	)		(134,639	)
Others			25,289			6,545			(63,022	)

	￦		(354,903	)		93,705			(128,337	)

(5)	Changes in deferred tax assets (liabilities) recognized in the consolidated statements of financial position for the years ended December 31, 2023 and 2024 are as follows:


		2023
		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	￦		199,553			6,597			133,134			—		339,284
Cash flow hedge			(55,340	)		29,622			4,863			—		(20,855	)
Investments in subsidiaries, associates and joint ventures			(8,377,687	)		1,300,263			(40,213	)		—		(7,117,637	)
Property, plant and equipment			(7,541,638	)		534,361			—			—		(7,007,277	)
Finance lease			(405,639	)		179,943			—			—		(225,696	)
Intangible assets			(24,931	)		1,526			—			—		(23,405	)
Financial assets at fair value through profit or loss			3,457			(5,199	)		—			—		(1,742	)
Financial assets at fair value through other comprehensive income			21,143			16,839			(10,624	)		—		27,358
Deferred revenue			169,980			(13,580	)		—			—		156,400
Provisions			7,089,344			(47,684	)		—			—		7,041,660
Doubtful receivables			2,474			(74	)		—			—		2,400
Other finance liabilities			21,418			(3,426	)		—			—		17,992
Gains or losses on foreign exchange translation			134,316			(6,306	)		—			—		128,010
Allowance for doubtful accounts			58,235			(2,492	)		—			—		55,743
Accrued income			16,614			17,321			—			—		33,935
Special deduction for property, plant and equipment			(215,159	)		3,299			—			—		(211,860	)
Others			1,487,572			(277,889	)		6,545			—		1,216,228

			(7,416,288	)		1,733,121			93,705			—		(5,589,462	)

Deferred tax on unused tax losses and tax credit
Unused tax losses			11,662,105			1,676,638			—			—		13,338,743
Excess of donation limit			81,046			(34,724	)		—			—		46,322
Tax credit			150,409			52,665			—			—		203,064

			11,893,560			1,694,569			—			—		13,588,129

	￦		4,477,272			3,427,690			93,705			—		7,998,667


		2024
		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	￦		339,284			384,503			139,566			—		863,353
Cash flow hedge			(20,855	)		(126,825	)		(8,435	)		—		(156,115	)
Investments in subsidiaries, associates and joint ventures			(7,117,637	)		(597,996	)		(134,639	)		—		(7,850,272	)
Property, plant and equipment			(7,007,277	)		(462,457	)		—			—		(7,469,734	)
Finance lease			(225,696	)		683			—			—		(225,013	)
Intangible assets			(23,405	)		(3,168	)		—			—		(26,573	)
Financial assets at fair value through profit or loss			(1,742	)		1,012			—			—		(730	)
Financial assets at fair value through other comprehensive income			27,358			18,110			(61,807	)		—		(16,339	)
Deferred revenue			156,400			1,705,918			—			—		1,862,318
Provisions			7,041,660			561,988			—			—		7,603,648
Doubtful receivables			2,400			(136	)		—			—		2,264
Other finance liabilities			17,992			(561	)		—			—		17,431
Gains or losses on foreign exchange translation			128,010			87,265			—			—		215,275
Allowance for doubtful accounts			55,743			12,078			—			—		67,821
Accrued income			33,935			(48,467	)		—			—		(14,532	)
Special deduction for property, plant and equipment			(211,860	)		542			—			—		(211,318	)
Others			1,216,228			166,914			(63,022	)		—		1,320,120

			(5,589,462	)		1,699,403			(128,337	)		—		(4,018,396	)

Deferred tax on unused tax losses and tax credit
Unused tax losses			13,338,743			(2,038,156	)		—			—		11,300,587
Excess of donation limit			46,322			(4,112	)		—			—		42,210
Tax credit			203,064			(35,313	)		—			—		167,751

			13,588,129			(2,077,581	)		—			—		11,510,548

	￦		7,998,667			(378,178	)		(128,337	)		—		7,492,152

(6)	Deferred tax assets (liabilities) recognized in the consolidated statements of fi n ancial position as of December 31, 2023 and 2024 are as follows:


		2023			2024

		In millions of won
Deferred tax assets	￦		13,161,802			13,436,624
Deferred tax liabilities			(5,163,135	)		(5,944,472	)

	￦		7,998,667			7,492,152

(7)	Details of deductible temporary differences, tax losses and unused tax credits for which no deferred tax assets were recognized as of December 31, 2023 and 2024 are as follows:


		2023		2024

		In millions of won
Deductible temporary differences and others	￦		1,811,062		1,416,650

(8)	Pillar Two Model Rules

The Company has assessed the potential exposure arising from the Pillar Two legislation based on the financial information for the year ended December 31, 2024. Based on the assessment, the Company has identified its potential exposure to Pillar Two income taxes on profits earned from its constituent entities operating in Nepal, Pakistan, Vietnam, and other jurisdictions where the expected Pillar Two effective tax rate is likely to be lower than

15%. As a result, the Company expects that KEPCO and its constituent entities operating therein will pay additional Pillar Two income taxes on the profit from such constituent entities.

The current income tax expense recognized for the year ended December 31, 2024 in relation with the additional Pillar Two income taxes amounts to approximately ￦3,727 million. The Company has applied the mandatory exception to recognition and disclosure of deferred taxes arising from Pillar Two income taxes.