The Covid-19 pandemic adversely affected expected profits of many entities. Therefore, recoverability of significant deferred tax balances, including those resulting from unused tax losses, should be reassessed after taking Covid-19 impacts into account.

The pandemic often triggered impairment losses on non-current assets, which resulted in additional deductible temporary differences. However, deferred tax assets can be recognised only to the extent that it is probable that taxable profit will be available against which those deductible temporary differences can be utilised.