Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Taxes

Taxes

The income tax expense and recovery reported differs from the amount computed by applying the statutory rate to income (loss) before income taxes for the following reasons:

	Year Ended December 31,
(Thousands of U.S. Dollars)	2021			2020			2019
Income (loss) before income taxes
United States	$	(31,329)		$	(19,065)		$	(27,984)
Foreign	54,465			(834,296)			123,959
	23,136			(853,361)			95,975
Statutory rate (1)	31		%	32		%	33		%
Income tax expense (recovery) expected	7,172			(273,076)			31,672
Impact of foreign taxes	9,723			26,668			9,387
Foreign currency translation	14,450			48,734			11,527
Goodwill Impairment	—			32,826			—
Stock-based compensation	1,708			666			430
Change in valuation allowance	(53,434)			75,241			3,429
Non-deductible third party royalty in Colombia	1,568			697			2,240
Other permanent differences	(1,058)			5,349			6,082
Non-deductible investment loss (gain)	525			7,501			(7,482)
Total income tax (recovery) expense	$	(19,346)		$	(75,394)		$	57,285
Effective tax rate	(84)		%	9		%	60		%
Current income tax expense
Foreign (2)	4,479			754			17,058
	4,479			754			17,058
Deferred income tax (recovery) expense
Foreign	(23,825)			(76,148)			40,227
Total income tax (recovery) expense	$	(19,346)		$	(75,394)		$	57,285

(1) The tax rate is the statutory rate in Colombia.

(2) 2021 current tax expense relates to capital gain tax from internal restructuring in Colombia.

In general, it is the Company’s practice and intention to reinvest the earnings of our non-U.S. subsidiaries in such subsidiaries’ operations. As of December 31, 2021, the Company has not made a provision for U.S. or additional foreign withholding taxes on the investments in foreign subsidiaries that are indefinitely reinvested. Generally, such amounts become subject to taxation upon the remittance of dividends and under certain other circumstances.

In the third quarter of 2021, the Colombia government enacted a new tax reform to replace the 2019 tax reform. The new tax reform increases the corporate tax rate to 35% as from January 1, 2022 onwards. The tax rates applied to the calculation of deferred income taxes have been adjusted to reflect this change.

The table below presents the components of the deferred tax assets as at December 31, 2021 and 2020:

	As at December 31,
(Thousands of U.S. Dollars)	2021		2020
Tax benefit of operating loss carryforwards	$	67,134	$	100,616
Tax basis in excess of book basis	16,815		37,698
Foreign tax credits and other accruals	91,381		86,664
Tax benefit of capital loss carryforwards	28,050		27,661
Deferred tax assets before valuation allowance	203,380		252,639
Valuation allowance	(141,886)		(195,321)
Deferred tax assets	$	61,494	$	57,318

At December 31, 2021, the Company has not recognized the benefit of unused non-capital loss carryforwards of $62.1 million (2020 - $46.0 million) for federal purposes in the United States, which expire from 2030 to 2041.

At December 31, 2021, the Company has not recognized the benefit of unused non-capital loss carryforwards of $21.1 million (2020 - $33.1 million) for federal and provincial purposes in Canada, which expire from 2030 to 2040. The Company has not recognized the benefit of capital loss carry forwards of $243.9 million (2020 - $240.5 million) for federal and provincial purposes in Canada which can be carried forward indefinitely.

At December 31, 2021, the Company has recognized the benefit of unused non-capital loss carryforwards of $102.4 million (2020 - $115.6 million), out of a total of $122.0 million; and no tax credits (2020 - $1.0 million), out of a total of $1.8 million, for federal purposes in Colombia. The Company’s losses of $122.0 million are entitled to a carryforward period of 12 years.

As at December 31, 2021 and 2020, Gran Tierra had no unrecognized tax benefits and related interest and penalties included in its deferred tax assets and current tax liabilities in the consolidated balance sheet. The Company does not anticipate any material changes with respect to unrecognized tax benefit within the next twelve months. The Company had no other significant interest or penalties related to taxes included in the consolidated statement of operations for the year ended December 31, 2021. The Company and its subsidiaries file income tax returns in the U.S. and certain other foreign jurisdictions. The Company is subject to income tax examinations for the tax years ended 2013 through 2021 in certain jurisdictions.