Income Tax Expense

12 Months Ended

Dec. 31, 2020

Major Components Of Tax Expense Income [Abstract]

18. Income Tax Expense

(1) Details of income tax expense for the years ended December 31, 2020, 2019 and 2018 are as follows:

	2020			2019				2018
		(In millions of Korean won)
Current tax on profit for the year	W		21,383	W	11,775		W		7,430
Deferred tax expense (benefit)			4,072		(249	)			(4,377	)
Income tax expense	W		25,455	W	11,526		W		3,053

(2) The differences between the tax expense on the Group’s profit before tax and the amount that would arise using the statutory tax rate applicable to profits of the entities for the years ended December 31, 2020, 2019 and 2018 are as follows:

	2020				2019				2018
		(In millions of Korean won)
Profit before income tax	W		88,011		W	51,256		W		34,439
Income tax using the statutory tax rate of each country			19,828			12,063				8,994
Adjustments
Expenses not deductible for tax purpose			20			42				62
Foreign tax credits			3,223			4,854				5,196
Changes in estimates related to prior period			11			(4,347	)			—
Utilization of previously unrecognized deferred tax asset			(412	)		—				(5,347	)
Change in deferred tax due to carry-forward deficits			—			(33	)			(6,265	)
Effect of change of foreign currency exchange rate			(19	)		(12	)			(221	)
Tax credit			(1,022	)		(543	)			—
Tax of non-recycled corporation income			668			—				—
Changes in deferred tax liabilities related to investment in subsidiaries			2,577			—				—
Others			581			(498	)			634
Total adjustments			5,627			(537	)			(5,941	)
Income tax expense	W		25,455		W	11,526		W		3,053
Effective tax rate			29	%		22	%			9	%

(3) Details of the changes in deferred income tax assets (liabilities) for the years ended December 31, 2020 and 2019 are as follows:

	2020
	Beginning balance				Increase (decrease)			Ending balance
		(In millions of Korean won)
Deferred income tax on temporary differences
Property and equipment	W		7		W	5		W	12
Intangible assets			221			181			402
Other non-current assets			104			401			505
Accounts payables			1,527			(58	)		1,469
Accrued expenses			39			138			177
Deferred revenue			674			(177	)		497
Allowance for doubtful account			275			10			285
Other non-current liabilities			46			—			46
Investments in subsidiaries			389			(389	)		—
Lease			1			7			8
Foreign taxes paid			—			1			1
Investments in subsidiaries(*)			—			(2,577	)		(2,577	)
Others			(25	)		67			42
Sub Total			3,258			(2,391	)		867
Deferred tax due to carry-forward deficits			33			(33	)		—
Deferred tax due to tax credit carry-forward			4,371			(1,648	)		2,723
Deferred tax assets	W		7,662		W	(4,072	)	W	3,590

(*) The Group recognized deferred tax liability of Won 2,577 million for taxable temporary differences associated with investments in subsidiaries. The deferred tax liability was measured by the amount of expected withholding taxes arising upon dividend distribution.

	2019
	Beginning balance				Increase (decrease)			Ending balance
		(In millions of Korean won)
Deferred income tax on temporary differences
Property and equipment	W		25		W	(18	)	W	7
Intangible assets			238			(17	)		221
Other non-current assets			8			96			104
Accounts payables			531			996			1,527
Accrued expenses			—			39			39
Deferred revenue			60			614			674
Allowance for doubtful account			264			11			275
Other non-current liabilities			46			—			46
Investments in subsidiaries			—			389			389
Lease			—			1			1
Foreign taxes paid			(4	)		4			—
Others			(21	)		(4	)		(25	)
Sub Total			1,147			2,111			3,258
Deferred tax due to carry-forward deficits			1,951			(1,918	)		33
Deferred tax due to tax credit carry-forward			4,315			56			4,371
Deferred tax assets	W		7,413		W	249		W	7,662

The future realizability of deferred tax assets is reassessed by taking into consideration various factors such as the Group's performance, the overall economic environment and industry outlook, expected future earnings and deductible period of tax credits carry-forward. As of December 31, 2020, the Group has recognized deferred tax assets related to temporary differences, tax loss carryforward and tax credit carryforwards, which can be utilized based on the likelihood of future taxable income. This amount may change if the estimate of future taxable income changes.

(4) Details of unused tax loss carryforwards and unused tax credit carryforwards that are not recognized as deferred income tax assets as of December 31, 2020 are as follows:

Year of expiration	Unused loss carryforwards		Unused tax credit carryforwards
2023		1,045		—
2024		2,662		—
2025		1,132		—
After 2025		6,108		1,759
Total	W	10,947	W	1,759

As of December 31, 2020 and 2019, the Group did not recognize deferred income tax asset for the temporary difference of Won 18,489 million and Won 14,350 million relating to investments in subsidiaries and other temporary differences of Won 751 million and Won 895 million, respectively, as such temporary differences are not expected to be utilized in the foreseeable future.