Deferred Tax Assets and Liabilities

12 Months Ended

Dec. 31, 2020

22	DEFERRED TAX ASSETS AND LIABILITIES

The analysis of deferred tax assets and liabilities are as follows:


	As of			As of
	December 31, 2020			December 31, 2019
	Million			Million
Deferred tax assets:
- Deferred tax assets to be recovered after 12 months, net		3,647			3,519
- Deferred tax assets to be recovered within 12 months, net		35,351			29,109

		38,998			32,628

Deferred tax liabilities:
- Deferred tax liabilities to be settled after 12 months, net		(1,420	)		(857	)
- Deferred tax liabilities to be settled within 12 months, net		(248	)		(531	)

		(1,668	)		(1,388	)

Deferred tax assets and liabilities recognized and the movements during 2020


	As of January 1, 2020			Credited/ (charged) to profit or loss			Credited to other comprehensive income		Exchange differences			As of December 31, 2020
	Million			Million			Million		Million			Million
Net deferred tax assets after offsetting:
Write-down of obsolete inventories		13			30			—		—			43
Depreciation, write-off and impairment of property, plant and equipment		6,122			(181	)		—		—			5,941
Accrued expenses and others		18,718			3,360			—		(1	)		22,077
Deferred revenue from Reward Program		5,485			2,612			—		—			8,097
Expected credit impairment losses		1,637			498			—		—			2,135
Recognition of right-of-use assets and lease liabilities		769			(33	)		—		—			736
Change in value of financial assets at FVOCI		(7	)		—			1		—			(6	)
Contract asset, contract liability and contract cost relating to customer contract		(109	)		84			—		—			(25	)

		32,628			6,370			1		(1	)		38,998

Net deferred tax liabilities after offsetting:
Depreciation, write-off and impairment of property, plant and equipment		(2,282	)		(677	)		—		39			(2,920	)
Recognition of right-of-use assets and lease liabilities		61			(51	)		—		—			10
Deferred revenue from Reward Program		266			31			—		—			297
Accrued expenses and others		567			378			—		—			945

		(1,388	)		(319	)		—		39			(1,668	)

Total		31,240			6,051			1		38			37,330

Deferred tax assets and liabilities recognized and the movements during 2019


	As of January 1, 2019			(Charged)/ credited to profit or loss			Charged to other comprehensive income			Exchange differences			As of December 31, 2019
	Million			Million			Million			Million			Million
Net deferred tax assets after offsetting:
Write-down of obsolete inventories		75			(62	)		—			—			13
Depreciation, write-off and impairment of property, plant and equipment		5,289			833			—			—			6,122
Accrued expenses and others		17,715			1,003			—			—			18,718
Deferred revenue from Reward Program		5,784			(299	)		—			—			5,485
Expected credit impairment losses		1,458			179			—			—			1,637
Recognition of right-of-use assets and lease liabilities		488			281			—			—			769
Change in value of financial assets at FVOCI		(6	)		—			(1	)		—			(7	)
Contract asset, contract liability and contract cost relating to customer contract		(661	)		552			—			—			(109	)

		30,142			2,487			(1	)		—			32,628

Net deferred tax liabilities after offsetting:
Depreciation, write-off and impairment of property, plant and equipment		(1,117	)		(1,152	)		—			(13	)		(2,282	)
Recognition of right-of-use assets and lease liabilities		16			45			—			—			61
Deferred revenue from Reward Program		157			109			—			—			266
Accrued expenses and others		138			427			—			2			567

		(806	)		(571	)		—			(11	)		(1,388	)

Total		29,336			1,916			(1	)		(11	)		31,240

As of December 31, 2020, the offsetting amount of deferred tax assets and deferred tax liabilities was RMB2,585 million (as of December 31, 2019: RMB2,611 million).

Deferred tax assets are recognized for deductible temporary differences and tax losses carry-forwards only to the extent that the realization of the related tax benefit through future taxable profits is probable. Certain subsidiaries of the Group did not recognize deferred tax assets of RMB11,284 million (2019: RMB8,677 million) in respect of deductible temporary differences and tax losses amounting to RMB58,154 million (2019: RMB42,469 million) that can be carried forward against future taxable income as of December 31, 2020. The deductible tax losses are allowed to be carried forward within next five years against future taxable profits, while those of high-tech enterprises are allowed to be within next ten years, and entities operating in Hong Kong can carry forward tax losses for unlimited period.