On December 31, 2017, the Tax Cuts and Jobs Act (the "TCJA") was enacted and was effective January 1, 2018. In accordance with ASC 740, Accounting for Income Taxes, which requires companies to recognize the effects of tax law changes in the period of enactment, the Company recorded the initial impacts of the TCJA in 2017. This overhaul of the US tax law made a number of substantial changes, including the reduction of the corporate tax rate from 35% to 21%, establishing a dividends received deduction for dividends paid by foreign subsidiaries to the US, elimination or limitation of certain deductions (interest, domestic production activities and executive compensation), imposing a mandatory tax on previously unrepatriated earnings accumulated offshore since 1986 and establishing global minimum income tax and base erosion tax provisions related to offshore activities and affiliated party payments.

The deemed repatriation of previously unremitted foreign earnings, of which the Company had accumulated approximately $3.0 billion as of December 31, 2017, was taxed at 8% to the extent those earnings were reinvested in non-cash foreign assets, while previously unremitted earnings that had not been reinvested, computed based upon a two-year historical average of foreign cash and cash equivalents balances, were taxed at 15.5%. The Company recorded a net charge of $197 million for this deemed repatriation in 2017, for which it does not expect a material cash outlay due to available foreign tax credit carryforwards.

The Company was also required to adjust the recorded amounts of its US deferred tax assets and liabilities resulting from the reduction in the US corporate tax rate and the impact of the dividends received deduction provisions on its deferred tax liabilities related to outside basis differences in certain joint venture investments. As a result of these changes, the Company recognized a tax benefit of approximately $107 million in 2017.

At the time the TCJA was enacted, the global minimum income tax and base erosion provisions would not be effective until the tax years beginning after December 31, 2017. Based on available elections, the Company chose to not record deferred taxes related to the estimated future income tax effects of the global minimum income tax provision.

The US Treasury issued proposed regulations in 2018 that sought to clarify the application of the TCJA provisions for the limitation of interest expense, including treatment of depreciation and other deductions in arriving at adjusted taxable income and application of the rules to controlled foreign affiliates.

In 2019, the US Treasury issued additional final and proposed regulations supplementing the TCJA provisions around base erosion payments, expense and foreign tax apportionment for foreign tax credit purposes and dividends received deductions at the foreign affiliate level. These proposed regulations are generally effective for years ending after the date they are published in the federal register. For guidance provided in both 2018 and 2019, the Company does not expect the final or proposed regulations, in current form, to have a material impact on current or future income tax expense. As a result, the Company will continue to monitor their expected impacts on the Company's filing positions and will record the impacts as discrete income tax expense adjustments in the period that the guidance is finalized.

Earnings (loss) from continuing operations before tax by jurisdiction are as follows:



	Year Ended December 31,
	2019	2018	2017
	(In $ millions)
US	252	480	262
International	736	1,030	813
Total	988	1,510	1,075

The income tax provision (benefit) consists of the following:



	Year Ended December 31,
	2019		2018		2017
	(In $ millions)
Current
US	(8	)	(184	)	201
International	149		143		158
Total	141		(41	)	359
Deferred
US	1		314		(110	)
International	(18	)	19		(36	)
Total	(17	)	333		(146	)
Total	124		292		213

A reconciliation of the significant differences between the US federal statutory tax rate of 21% (35% for 2017) and the effective income tax rate on income from continuing operations is as follows:



	Year Ended December 31,
	2019		2018		2017
	(In $ millions, except percentages)
Income tax provision computed at US federal statutory tax rate	208		317		376
Change in valuation allowance	(47	)	94		218
Equity income and dividends	(38	)	(48	)	(87	)
(Income) expense not resulting in tax impact, net	(9	)	(51	)	(157	)
US tax effect of foreign earnings and dividends	85		25		521
Foreign tax credits	(76	)	(20	)	(759	)
Other foreign tax rate differentials	4		17		(38	)
Legislative changes	(3	)	(59	)	116
State income taxes, net of federal benefit	6		4		12
Other, net	(6	)	13		11
Income tax provision (benefit)	124		292		213

Effective income tax rate	13	%	19	%	20	%

As a result of the TCJA, US federal and state income taxes have been recorded on undistributed foreign earnings accumulated from 1986 through December 31, 2017. Based on the provisions of the law, the Company's previously taxed income for its foreign subsidiaries significantly exceeds its offshore cash balances. The Company has not recorded a deferred tax liability for foreign withholding or other foreign local tax that would be due when cash is actually repatriated to the US because those foreign earnings are considered permanently reinvested in the business or may be remitted substantially free of any additional local taxes. The determination of the amount of the unrecognized deferred tax liability related to the undistributed earnings is not practicable.

The effective income tax rate for the year ended December 31, 2019 was significantly lower than the effective income tax rate for the year ended December 31, 2018. This variation was primarily due to a valuation allowance provided against Luxembourg net operating loss carryforwards in 2018. In addition, the 2019 effective income tax rate benefited from the favorable impact of a 2019 release of valuation allowances due to higher projected utilization of foreign tax credit carryforwards. The higher projected utilization resulted from (1) a shift in the expected sourcing of forecasted US taxable income (domestic vs. foreign sourced) and (2) new regulatory guidance issued in 2019.

The effective tax rate for the year ended December 31, 2018 was comparable to the effective tax rate for the year ended December 31, 2017. The effective tax rate for 2018 was slightly less than the statutory US tax rate primarily due to the positive impact from the jurisdictional mix of earnings, largely offset by increased valuation allowances established on certain deferred tax assets, particularly related to increases in provisionally recorded estimates of valuation allowances on foreign tax credits in the US and net operating loss carryforwards in Luxembourg, due to certain restructuring transactions completed to facilitate future repatriation of cash to the US.

During 2017, the Company undertook various reorganization transactions to separate certain Acetate Tow assets to reorganize the holdings of its various foreign subsidiaries. As a result, the Company generated additional net foreign tax credit carryforwards of approximately $240 million, the gross impacts of which were reflected in the Foreign tax credits line and the US tax effect of foreign earnings lines above, that will be carried forward to future tax periods. These new credit carryforwards, as well as other credits carried forward into 2017, were evaluated for realizability under the provisions of the TCJA. Due to the TCJA and uncertainty as to future sources of general limitation foreign source income to allow for utilization of these credits, the Company recorded a valuation allowance on these foreign tax credits in the amount of $164 million, which was reflected in the Change in valuation allowance line in the effective tax rate reconciliation above.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the consolidated deferred tax assets and liabilities are as follows:



	As of December 31,
	2019		2018
	(In $ millions)
Deferred Tax Assets
Pension and postretirement obligations	140		138
Accrued expenses	57		61
Inventory	11		13
Net operating loss carryforwards	506		616
Tax credit carryforwards	273		330
Other	227		195
Subtotal	1,214		1,353
Valuation allowance⁽¹⁾	(714	)	(899	)
Total	500		454
Deferred Tax Liabilities
Depreciation and amortization	411		375
Investments in affiliates	192		203
Other	58		47
Total	661		625
Net deferred tax assets (liabilities)	(161	)	(171	)

______________________________

As of December 31, 2019, the Company had available US federal net operating loss carryforwards of $31 million that are subject to limitation. These net operating loss carryforwards begin to expire in 2022. As of December 31, 2019, the Company also had available state net operating loss carryforwards, net of federal tax impact, of $35 million, $28 million of which are offset by a valuation allowance due to uncertain recoverability. The Company also has foreign net operating loss carryforwards available as of December 31, 2019 of $1.8 billion primarily for Luxembourg, China, Mexico and Spain, with various expiration dates. Net operating loss carryforwards of $167 million in China are scheduled to expire beginning in 2020 through 2024. Net operating losses in most other foreign jurisdictions do not have an expiration date.

The Company had available $243 million of foreign tax credit carryforwards, which are mostly offset by a valuation allowance of $207 million due to uncertain recoverability and $18 million of alternative minimum tax credit carryforwards in the US. The foreign tax credit carryforwards are subject to a ten-year carryforward period and expire beginning in 2027. The alternative minimum tax credits are subject to annual limitation due to prior ownership changes, but have an unlimited carryforward period and can be used to offset federal tax liability in future years. The Company also has $8 million of research and development tax credit carryforwards as of December 31, 2019, which it expects to utilize prior to expiration beginning in 2037.

The Company evaluates its deferred tax assets on a quarterly basis to determine whether a valuation allowance is necessary. Realization of deferred tax assets ultimately depends on the existence of sufficient taxable income in the applicable carryback or carryforward periods. Changes in the Company's estimates of future taxable income and prudent and feasible tax planning strategies will affect the estimate of the realization of the tax benefits of these foreign tax credit carryforwards. As such, the Company is currently evaluating tax planning strategies to enable use of the foreign tax credit carryforwards that may decrease the Company's effective tax rate in future periods as the valuation allowance is reversed.

Activity related to uncertain tax positions is as follows:



	Year Ended December 31,
	2019		2018		2017
	(In $ millions)
As of the beginning of the year	162		119		114
Increases in tax positions for the current year	1		61		14
Increases in tax positions for prior years⁽¹⁾	37		4		4
Decreases in tax positions for prior years	(41	)	(21	)	(7	)
Decreases due to settlements	(25	)	(1	)	(6	)
As of the end of the year	134		162		119

Total uncertain tax positions that if recognized would impact the effective tax rate	132		154		100
Total amount of interest expense (benefit) and penalties recognized in the consolidated statements of operations⁽²⁾	5		1		6
Total amount of interest expense and penalties recognized in the consolidated balance sheets	45		38		38

The Company primarily operates in the US, Germany, Belgium, Canada, China, Italy, Mexico and Singapore. Examinations are ongoing in a number of these jurisdictions. The Company's US tax returns for the years 2013 through 2015 are currently under audit by the US Internal Revenue Service ("IRS"). Outside of the US, the Company's German tax returns for the years 2008 through 2015 are under audit as well as certain of the Company's other subsidiaries within their respective jurisdictions.

The decrease in uncertain tax positions for the year ended December 31, 2019 was primarily due to progress of tax examinations. While it is reasonably possible that a further change in the unrecognized tax benefits may occur within the next twelve months related to the settlement of one or more of these audits, the Company is unable to estimate the amount of any such change.

During the year ended December 31, 2019, the IRS concluded federal income tax audits of the Company's tax returns for the years 2009 through 2012. The examinations did not result in a material impact to income tax expense. The Company's 2013 through 2015 tax years are under joint examination by the US, German and Dutch taxing authorities. The examinations are in the preliminary data gathering phase.