Income Taxes

Income taxes have been provided based on the tax laws and rates in countries in which our operations are conducted and income is earned. The Company received an assurance from the Bermuda Minister of Finance that it would be exempted from local income, withholding and capital gains taxes until March 2035. Consequently, the provision for income taxes relates to income earned by certain subsidiaries of the Company which are located in, or earn income in, jurisdictions that impose income taxes, primarily Ireland, Singapore and the United States.

The sources of income from continuing operations before income taxes and earnings of our unconsolidated equity method investments for the three and nine months ended September 30, 2017 and 2016 were as follows:



	Three Months Ended September 30,					Nine Months Ended September 30,
	2017		2016			2017		2016
U.S. operations	$	531	$	(92	)	$	2,029	$	1,652
Non-U.S. operations	61,799		28,182			93,457		85,469
Income from continuing operations before income taxes and earnings of unconsolidated equity method investments	$	62,330	$	28,090		$	95,486	$	87,121

All of our aircraft-owning subsidiaries that are recognized as corporations for U.S. tax purposes are non-U.S. corporations. These non-U.S. subsidiaries generally earn income from sources outside the United States and typically are not subject to U.S. federal, state or local income taxes unless they operate within the U.S., in which case they may be subject to federal, state and local income taxes. The aircraft owning subsidiaries resident in Ireland, Mauritius and Singapore are subject to tax in those respective jurisdictions.

We have a U.S. based subsidiary which provides management services to our non-U.S. subsidiaries and is subject to U.S. federal, state and local income taxes. We also have Ireland and Singapore based subsidiaries which provide management services to our non-U.S. subsidiaries and are subject to tax in those respective jurisdictions.

The consolidated income tax expense for the three and nine months ended September 30, 2017 and 2016 was determined based on estimates of the Company’s consolidated effective income tax rates for the years ending December 31, 2017 and 2016, respectively.

The Company’s effective tax rate for the three and nine months ended September 30, 2017 was 9.9% and 8.9%, respectively, compared to 8.8% and 10.1%, respectively, for the three and nine months ended September 30, 2016. Movements in the effective tax rates are generally caused by changes in the proportion of the Company’s pre-tax earnings in taxable and non-tax jurisdictions.

Differences between statutory income tax rates and our effective income tax rates applied to pre-tax income from continuing operations consisted of the following:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Notional U.S. federal income tax expense at the statutory rate	$	21,815		$	9,831		$	33,420		$	30,492
U.S. state and local income tax, net	33			14			122			139
Non-U.S. operations:
Bermuda	(12,260		)	(6,025		)	(10,632		)	(16,687		)
Ireland	(315		)	82			(569		)	2,155
Singapore	(1,518		)	(823		)	(9,107		)	(4,874		)
Other low tax jurisdictions	(1,450		)	(752		)	(4,377		)	(2,835		)
Non-deductible expenses in the U.S.	(104		)	133			(298		)	418
Other	(6		)	(2		)	(23		)	(26		)
Provision for income taxes	$	6,195		$	2,458		$	8,536		$	8,782