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Income Taxes
 12 Months Ended
Dec. 31, 2019
Text block [abstract]  
Income Taxes
23.
Income Taxes
 
 
(a)
Details of income tax expense (benefit) for the years ended December 31, 2017, 2018 and 2019 are as follows:
 
(In millions of won)
 
 
  
2017
 
  
2018
 
  
2019
 
Current tax expense
  
   
  
   
  
   
Current year
  
W
512,123
 
  
 
167,394
 
  
 
193,691
 
Adjustment for prior years
  
 
—  
 
  
 
82,225
 
  
 
(35,787
) 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
  
W
512,123
 
  
 
249,619
 
  
 
157,904
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Deferred tax expense (benefit)
  
   
  
   
  
   
Origination and reversal of temporary differences
  
W
(104,835
) 
  
 
(226,360
) 
  
 
(963,385
) 
Change in unrecognized deferred tax assets
  
 
(11,708
) 
  
 
64,818
 
  
 
333,317
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
  
W
(116,543
) 
  
 
(161,542
) 
  
 
(630,068
) 
 
  
 
 
 
  
 
 
 
  
 
 
 
Income tax expense (benefit)
  
W
395,580
 
  
 
88,077
 
  
 
(472,164
) 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
(b)
Income taxes recognized directly in other comprehensive income or loss for the years ended December 31, 2017, 2018, and 2019 are as follows:
 
(In millions of won)
  
 
 
 
  
2017
 
 
  
Before tax
 
  
Tax benefit
 
  
Net of tax
 
Remeasurements of net defined benefit liabilities (assets)
  
W
(16,260
) 
  
 
9,259
 
  
 
(7,001
) 
Foreign currency translation differences for foreign operations
  
 
(231,738
) 
  
 
—  
 
  
 
(231,738
) 
Change in equity of equity method investee
  
 
1,346
 
  
 
—  
 
  
 
1,346
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
  
W
(246,652
) 
  
 
9,259
 
  
 
(237,393
) 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
(In millions of won)
  
 
 
 
  
2018
 
 
  
Before tax
 
  
Tax expense
 
  
Net of tax
 
Remeasurements of net defined benefit liabilities (assets)
  
W
5,690
 
  
 
(1,169
) 
  
 
4,521
 
Foreign currency translation differences for foreign operations
  
 
(19,987
) 
  
 
—  
 
  
 
(19,987
) 
Change in equity of equity method investee
  
 
57
 
  
 
—  
 
  
 
57
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
  
W
(14,240
) 
  
 
(1,169
) 
  
 
(15,409
) 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
(In millions of won)
  
 
 
 
  
2019
 
 
  
Before tax
 
  
Tax expense
 
  
Net of tax
 
Remeasurements of net defined benefit liabilities (assets)
  
W
128,640
 
  
 
(35,235
) 
  
 
93,405
 
Foreign currency translation differences for foreign operations
  
 
106,690
 
  
 
—  
 
  
 
106,690
 
Change in equity of equity method investee
  
 
4,163
 
  
 
—  
 
  
 
4,163
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
  
W
239,493
 
  
 
(35,235
) 
  
 
204,258
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
(c)
Reconciliation of the actual effective tax rate for the years ended December 31, 2017, 2018, and 2019 is as follows:
 
(In millions of won)
  
 
 
 
 
 
 
 
 
 
  
2017
 
 
2018
 
 
2019
 
Profit (loss) before income taxes
  
W
 
 
 
 
2,332,632
 
 
   
 
 
(91,366
) 
 
   
 
 
(3,344,242
) 
 
  
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
Income tax
expense (
benefit
)
using each country’s tax rate
  
 
28.54
% 
 
 
665,733
 
 
 
(33.60
%) 
 
 
30,695
 
 
 
23.94
% 
 
 
(800,660
) 
Non-deductible
expenses
  
 
2.72
% 
 
 
63,416
 
 
 
(40.07
%) 
 
 
36,608
 
 
 
(0.95
%) 
 
 
31,649
 
Tax credits
  
 
(10.64
%) 
 
 
(248,191
) 
 
 
117.27
% 
 
 
(107,146
) 
 
 
1.47
% 
 
 
(49,269
) 
Change in unrecognized deferred tax assets
  
 
(0.50
%) 
 
 
(11,708
) 
 
 
(70.94
%) 
 
 
64,818
 
 
 
(9.97
%) 
 
 
333,318
 
Adjustment for prior years(*1)
  
 
—  
 
 
 
—  
 
 
 
(90.00
%) 
 
 
82,225
 
 
 
1.07
% 
 
 
(35,787
) 
Effect on change in tax rate
  
 
(3.10
%) 
 
 
(72,376
) 
 
 
15.68
% 
 
 
(14,326
) 
 
 
(0.40
%) 
 
 
13,353
 
Others
  
 
(0.06
%) 
 
 
(1,294
) 
 
 
5.25
% 
 
 
(4,797
) 
 
 
(1.05
%) 
 
 
35,232
 
 
  
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
Actual income tax expense (benefit)
  
W
 
 
 
 
395,580
 
 
   
 
 
88,077
 
 
   
 
 
(472,164
) 
 
  
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
Actual effective tax rate
  
   
 
 
16.96
% 
 
   
 
 
(*2
) 
 
   
 
 
(*2
) 
 
(*1)
Consist of changes in tax credits in amended tax returns and expected amount of income tax adjustment in relation to the transfer price investigation and others
(*2)
Actual effective tax rate are not calculated due to loss before income tax for 2018 and 2019.
 
 
(d)
Tax uncertainties
In June 2019, LG Display Guangzhou Co., Ltd, LG Display Yantai Co., Ltd. and LG Display Nanjing Co., Ltd., subsidiaries of the Controlling Company, were imposed of additional taxes amounting to
W
127.1 billion, in aggregate, by the Chinese tax authorities in connection with the transfer price investigation initiated in 2015.
OECD Guidelines, the Korea-China tax treaty, and the domestic tax laws of both countries stipulate mutual agreements to resolve double taxation. In July 2019, the Controlling Company registered an application form to initiate a mutual agreement on the estimated amount of
W
109.2 billion corporate tax adjustment from the Korea National Tax Service. The application was officially registered as a mutual agreement and the two tax authorities held their first meeting in November 2019 and further consultation will be conducted in 2020.
Meanwhile, the Controlling Company expects that the mutual agreement between tax authorities will be processed and be resolved within a reasonable period and the Controlling Company recognized the estimated income tax refund as current tax asset as of December 31, 2019.