Income Taxes

3 Months Ended

Mar. 31, 2021


	Three Months Ended March 31,
	2021	2020
	(In percentages)
Effective income tax rate	21	22

The effective income tax rate for the three months ended March 31, 2021, was comparable to the same period in 2020. The effective tax rate for the three months ended March 31, 2021, was unfavorably impacted by $28 million of uncertain tax positions primarily due to lending terms related to internal treasury operations. The effective income tax rate for the three months ended March 31, 2020, was unfavorably impacted by functional currency differences in offshore jurisdictions and changes in the jurisdictional mix of earnings.

The Company will continue to monitor global legislative and regulatory developments related to COVID-19 and will record the associated tax impacts as discrete events in the periods the guidance is finalized, or when the Company is able to estimate an impact.

In December 2017, the Tax Cuts and Jobs Act (the "TCJA") was enacted and was effective January 1, 2018. The U.S. Treasury has issued various final and proposed regulatory packages supplementing the TCJA provisions since 2018, which the Company does not expect to have a material impact on current or future income tax expense. The Company will continue to monitor the expected impacts of any new guidance 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 or becomes effective.

Due to the TCJA and uncertainty as to future foreign source income, the Company previously recorded a valuation allowance on a substantial portion of its foreign tax credits. The Company is currently evaluating tax planning strategies that would allow utilization of the Company's foreign tax credit carryforwards. Implementation of these strategies in future periods could reduce the level of valuation allowance that is needed, thereby decreasing the Company's effective tax rate.

The Company's 2013 through 2015 tax years are under joint examination by the U.S., German and Dutch taxing authorities. As of March 31, 2021, the examinations are still in progress and the Company is awaiting formal written communication of any proposed assessments.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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