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Deferred Income Tax and Income Tax Expense | 12 Months Ended
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Dec. 31, 2017
Text block1 [abstract] |
Deferred Income Tax and Income Tax Expense |
28. | Deferred Income Tax and Income Tax Expense
The analysis of deferred tax assets and deferred tax liabilities as of December 31, 2016 and 2017, is as follows:
(In millions of Korean won) |  | 2016 |  |  | 2017 |
Deferred tax assets |  |  |  |  |  |  |  |
Deferred tax assets to be recovered within 12 months |  | ￦ | 265,997 |  |  | ￦ | 318,339 |
Deferred tax assets to be recovered after more than 12 months |  |  | 1,124,420 |  |  |  | 1,140,252 |
|  | ￦ | 1,390,417 |  |  | ￦ | 1,458,591 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Deferred tax liability to be recovered within 12 months |  |  | (48,033 | ) |  |  | (15,705 | )
Deferred tax liability to be recovered after more than 12 months |  |  | (778,655 | ) |  |  | (859,126 | )
|  |  | (826,688 | ) |  |  | (874,831 | )
Deferred tax assets after offsetting |  | ￦ | 701,409 |  |  | ￦ | 712,222 |
Deferred tax liabilities after offsetting |  | ￦ | 137,680 |  |  | ￦ | 128,462 |
The gross movements on the deferred income tax account for the years ended December 31, 2016 and 2017, are calculated as follows:
(In millions of Korean won) |  | 2016 |  |  | 2017 |
Beginning |  | ￦ | 715,747 |  |  | ￦ | 563,729 |
Charged(credited) to the statement of profit or loss |  |  | (152,102 | ) |  |  | (1,771 | )
Charged(credited) to other comprehensive income |  |  | 84 |  |  |  | 21,802 |
Ending |  | ￦ | 563,729 |  |  | ￦ | 583,760 |
The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:
(In millions of Korean won) |  | 2016 |
|  | Beginning |  |  | Statement of operations |  |  | Other comprehensive income |  |  | Ending |
Deferred tax liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative instruments |  | ￦ | (19,155 | ) |  | ￦ | (33,569 | ) |  | ￦ | 3,536 |  |  | ￦ | (49,188 | )
Available-for-sale financial assets |  |  | (29,430 | ) |  |  | (10 | ) |  |  | (2,262 | ) |  |  | (31,702 | )
Investment in subsidiaries, associates and joint ventures |  |  | (50,235 | ) |  |  | (666 | ) |  |  | 155 |  |  |  | (50,746 | )
Depreciation |  |  | (53,872 | ) |  |  | 14,374 |  |  |  | — |  |  |  | (39,498 | )
Advanced depreciation provision |  |  | (231,692 | ) |  |  | 6,005 |  |  |  | — |  |  |  | (225,687 | )
Deposits for severance benefits |  |  | (251,924 | ) |  |  | (55,806 | ) |  |  | — |  |  |  | (307,730 | )
Accrued income |  |  | (1,808 | ) |  |  | (216 | ) |  |  | — |  |  |  | (2,024 | )
Reserve for technology and human resource development |  |  | (1,216 | ) |  |  | 469 |  |  |  | — |  |  |  | (747 | )
Others |  |  | (135,802 | ) |  |  | 16,436 |  |  |  | — |  |  |  | (119,366 | )
|  |  | (775,134 | ) |  |  | (52,983 | ) |  |  | 1,429 |  |  |  | (826,688 | )
Deferred tax assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Provisions for impairment on trade receivables |  |  | 136,743 |  |  |  | (26,467 | ) |  |  | — |  |  |  | 110,276 |
Inventory valuation |  |  | 56 |  |  |  | (8 | ) |  |  | — |  |  |  | 48 |
Contribution for construction |  |  | 19,618 |  |  |  | (1,527 | ) |  |  | — |  |  |  | 18,091 |
Accrued expenses |  |  | 64,117 |  |  |  | 16,239 |  |  |  | — |  |  |  | 80,356 |
Provisions |  |  | 20,353 |  |  |  | (132 | ) |  |  | — |  |  |  | 20,221 |
Property, plant and equipment |  |  | 239,791 |  |  |  | (6,876 | ) |  |  | — |  |  |  | 232,915 |
Retirement benefit obligations |  |  | 331,980 |  |  |  | 41,857 |  |  |  | (1,345 | ) |  |  | 372,492 |
Withholding of facilities expenses |  |  | 7,360 |  |  |  | (450 | ) |  |  | — |  |  |  | 6,910 |
Accrued payroll expenses |  |  | 21,634 |  |  |  | 4,281 |  |  |  | — |  |  |  | 25,915 |
Deduction of installment receivables |  |  | 10,513 |  |  |  | 3,374 |  |  |  | — |  |  |  | 13,887 |
Assets retirement obligation |  |  | 16,974 |  |  |  | 1,112 |  |  |  | — |  |  |  | 18,086 |
Gain or loss foreign currency translation |  |  | 43,283 |  |  |  | 24,418 |  |  |  | — |  |  |  | 67,701 |
Deferred revenue |  |  | 43,792 |  |  |  | (17,679 | ) |  |  | — |  |  |  | 26,113 |
Real-estate sales |  |  | 2,980 |  |  |  | 871 |  |  |  | — |  |  |  | 3,851 |
(In millions of Korean won) |  | 2016 |
|  | Beginning |  |  | Statement of operations |  |  | Other comprehensive income |  |  | Ending |
Tax credit carryforwards |  |  | 212,820 |  |  |  | (13,221 | ) |  |  | — |  |  |  | 199,599 |
Accumulated deficit |  |  | 107,485 |  |  |  | (107,485 | ) |  |  | — |  |  |  | — |
Others |  |  | 211,382 |  |  |  | (17,426 | ) |  |  | — |  |  |  | 193,956 |
|  |  | 1,490,881 |  |  |  | (99,119 | ) |  |  | (1,345 | ) |  |  | 1,390,417 |
Net balance |  | ￦ | 715,747 |  |  | ￦ | (152,102 | ) |  | ￦ | 84 |  |  | ￦ | 563,729 |
(In millions of Korean won) |  | 2017 |
|  | Beginning |  |  | Statement of operations |  |  | Other comprehensive income |  |  | Ending |
Deferred tax liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative instruments |  | ￦ | (49,188 | ) |  | ￦ | 49,188 |  |  | ￦ | — |  |  | ￦ | — |
Available-for-sale financial assets |  |  | (31,702 | ) |  |  | (164 | ) |  |  | 1,346 |  |  |  | (30,520 | )
Investment in subsidiaries, associates and joint ventures |  |  | (50,746 | ) |  |  | (42,659 | ) |  |  | (3,245 | ) |  |  | (96,650 | )
Depreciation |  |  | (39,498 | ) |  |  | 39,498 |  |  |  | — |  |  |  | — |
Advanced depreciation provision |  |  | (225,687 | ) |  |  | (22,905 | ) |  |  | — |  |  |  | (248,592 | )
Deposits for severance benefits |  |  | (307,730 | ) |  |  | (80,126 | ) |  |  | — |  |  |  | (387,856 | )
Accrued income |  |  | (2,024 | ) |  |  | (126 | ) |  |  | — |  |  |  | (2,150 | )
Reserve for technology and human resource development |  |  | (747 | ) |  |  | 433 |  |  |  | — |  |  |  | (314 | )
Others |  |  | (119,366 | ) |  |  | 10,617 |  |  |  | — |  |  |  | (108,749 | )
|  |  | (826,688 | ) |  |  | (46,244 | ) |  |  | (1,899 | ) |  |  | (874,831 | )
Deferred tax assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative instruments |  |  | — |  |  |  | 34,572 |  |  |  | (9,848 | ) |  |  | 24,724 |
Provisions for impairment on trade receivables |  |  | 110,276 |  |  |  | 11,380 |  |  |  | — |  |  |  | 121,656 |
Inventory valuation |  |  | 48 |  |  |  | (48 | ) |  |  | — |  |  |  | — |
Contribution for construction |  |  | 18,091 |  |  |  | 180 |  |  |  | — |  |  |  | 18,271 |
Accrued expenses |  |  | 80,356 |  |  |  | 10,683 |  |  |  | — |  |  |  | 91,039 |
Provisions |  |  | 20,221 |  |  |  | 3,858 |  |  |  | — |  |  |  | 24,079 |
Property, plant and equipment |  |  | 232,915 |  |  |  | (841 | ) |  |  | — |  |  |  | 232,074 |
Retirement benefit obligations |  |  | 372,492 |  |  |  | 67,751 |  |  |  | 26,806 |  |  |  | 467,049 |
Withholding of facilities expenses |  |  | 6,910 |  |  |  | 472 |  |  |  | — |  |  |  | 7,382 |
Accrued payroll expenses |  |  | 25,915 |  |  |  | (10,786 | ) |  |  | — |  |  |  | 15,129 |
Deduction of installment receivables |  |  | 13,887 |  |  |  | (13,887 | ) |  |  | — |  |  |  | — |
Assets retirement obligation |  |  | 18,086 |  |  |  | 2,750 |  |  |  | — |  |  |  | 20,836 |
Gain or loss foreign currency translation |  |  | 67,701 |  |  |  | (67,558 | ) |  |  | — |  |  |  | 143 |
Deferred revenue |  |  | 26,113 |  |  |  | 221 |  |  |  | — |  |  |  | 26,334 |
Real-estate sales |  |  | 3,851 |  |  |  | 4,847 |  |  |  | — |  |  |  | 8,698 |
Tax credit carryforwards |  |  | 199,599 |  |  |  | (48,823 | ) |  |  | — |  |  |  | 150,776 |
Deficit carried over |  |  | — |  |  |  | 2,699 |  |  |  | — |  |  |  | 2,699 |
(In millions of Korean won) |  | 2017 |
|  | Beginning |  |  | Statement of operations |  |  | Other comprehensive income |  |  | Ending |
Others |  |  | 193,956 |  |  |  | 47,003 |  |  |  | 6,743 |  |  |  | 247,702 |
|  |  | 1,390,417 |  |  |  | 44,473 |  |  |  | 23,701 |  |  |  | 1,458,591 |
Net balance |  | ￦ | 563,729 |  |  | ￦ | (1,771 | ) |  | ￦ | 21,802 |  |  | ￦ | 583,760 |
The tax impacts recognized directly to equity as of December 31, 2015, 2016 and 2017, are as follows:
|  | 2015 |  |  | 2016 |  |  | 2017 |
(In millions of Korean won) |  | Before recognition |  |  | Tax effect |  |  | After recognition |  |  | Before recognition |  |  | Tax effect |  |  | After recognition |  |  | Before recognition |  |  | Tax effect |  |  | After recognition |
Available-for-sale valuation gain(loss) |  | ￦ | (47,515 | ) |  | ￦ | 11,499 |  |  | ￦ | (36,016 | ) |  | ￦ | 9,347 |  |  | ￦ | (2,262 | ) |  | ￦ | 7,085 |  |  | ￦ | (5,561 | ) |  | ￦ | 1,346 |  |  | ￦ | (4,215 | )
Hedge instruments valuation gain(loss) |  |  | 18,406 |  |  |  | (4,454 | ) |  |  | 13,952 |  |  |  | (14,611 | ) |  |  | 3,536 |  |  |  | (11,075 | ) |  |  | 40,694 |  |  |  | (9,848 | ) |  |  | 30,846 |
Remeasurements from net defined benefit liabilities |  |  | (49,963 | ) |  |  | 12,091 |  |  |  | (37,872 | ) |  |  | 5,558 |  |  |  | (1,345 | ) |  |  | 4,213 |  |  |  | (110,768 | ) |  |  | 26,806 |  |  |  | (83,962 | )
Shares of gain(loss) of associates and joint ventures |  |  | (5,297 | ) |  |  | 1,282 |  |  |  | (4,015 | ) |  |  | (641 | ) |  |  | 155 |  |  |  | (486 | ) |  |  | 13,410 |  |  |  | (3,245 | ) |  |  | 10,165 |
Foreign currency translation adjustment |  |  | (6,443 | ) |  |  | 1,559 |  |  |  | (4,884 | ) |  |  | (7,133 | ) |  |  | 1,726 |  |  |  | (5,407 | ) |  |  | (27,865 | ) |  |  | 6,743 |  |  |  | (21,122 | )
Total |  | ￦ | (90,812 | ) |  | ￦ | 21,977 |  |  | ￦ | (68,835 | ) |  | ￦ | (7,480 | ) |  | ￦ | 1,810 |  |  | ￦ | (5,670 | ) |  | ￦ | (90,090 | ) |  | ￦ | 21,802 |  |  | ￦ | (68,288 | )
Details of income tax expense(benefit) for the years ended December 31, 2015, 2016 and 2017, are calculated as follows:
(In millions of Korean won) |  | 2015 |  |  | 2016 |  |  | 2017 |
Current income tax expense(benefit) |  | ￦ | (5,003 | ) |  | ￦ | 176,212 |  |  | ￦ | 268,885 |
Impact of change in deferred taxes |  |  | 232,134 |  |  |  | 152,102 |  |  |  | 1,771 |
Income tax expense |  | ￦ | 227,131 |  |  | ￦ | 328,314 |  |  | ￦ | 270,656 |
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the entities as follows:
|  | 2015 |  |  | 2016 |  |  | 2017 |
Profit before income tax expense |  | ￦ | 710,741 |  |  | ￦ | 1,123,431 |  |  | ￦ | 816,997 |
Statutory income tax expense |  | ￦ | 171,999 |  |  | ￦ | 271,870 |  |  | ￦ | 197,251 |
Tax effect |  |  |  |  |  |  |  |  |  |  |  |
Income not taxable for taxation purposes |  |  | (21,881 | ) |  |  | (28,093 | ) |  |  | (19,268 | )
Non-deductible expenses |  |  | 28,849 |  |  |  | 21,947 |  |  |  | 39,746 |
Tax credit |  |  | (9,660 | ) |  |  | (13,764 | ) |  |  | (27,211 | )
Additional payment of income taxes |  |  | 997 |  |  |  | (4,780 | ) |  |  | 976 |
Tax effect and adjustment on consolidation |  |  |  |  |  |  |  |  |  |  |  |
Goodwill impairment |  |  | 23,185 |  |  |  | 31,847 |  |  |  | 20,475 |
Eliminated dividend income form subsidiaries |  |  | 20,452 |  |  |  | 40,087 |  |  |  | 34,305 |
Changes of out-side tax effect |  |  | 9,844 |  |  |  | (567 | ) |  |  | 17,990 |
Others |  |  | 3,346 |  |  |  | 9,767 |  |  |  | 6,392 |
Income tax expense |  | ￦ | 227,131 |  |  | ￦ | 328,314 |  |  | ￦ | 270,656 |

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