Income Taxes

6 Months Ended

Jun. 30, 2021


	Three Months Ended June 30,		Six Months Ended June 30,
	2021	2020	2021	2020
	(In percentages)
Effective income tax rate	18	24	19	23

The effective income tax rate for the three and six months ended June 30, 2021, was lower compared to the same periods in 2020, primarily due to non-recurring adjustments in the prior periods to uncertain tax positions due to available attribute carryforwards and the impact of functional currency differences in offshore jurisdictions. In the current periods, these favorable differences are partially offset by increased earnings in high tax jurisdictions and adjustments of $28 million of uncertain tax positions primarily due to lending terms related to internal treasury operations recorded during the three months ended March 31, 2021.

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 June 30, 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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