Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Components of Income/(Loss) Before Income Taxes and Equity in Net Income/(Loss) of Affiliates

The components of income/(loss) before income taxes and equity in net income of affiliates, were:

	Year Ended December 31,
(IN MILLIONS)	2019			2018			2017
UK	$	(30	)	$	3		$	27
Non-UK		(633	)		(885	)		801
Income/(loss) before income taxes and equity in net income/(loss) of affiliates	$	(663	)	$	(882	)	$	828

Provision for Income Taxes Attributable to Income Before Income Taxes and Equity in Net Income of Affiliates

The provision for income taxes attributable to the income/(loss) before income taxes and equity in net income/(loss) of affiliates consisted of:

	Year Ended December 31,
(IN MILLIONS)	2019			2018			2017
Current:
UK	$	—		$	—		$	—
Non-UK .		(265	)		332			226
		(265	)		332			226
Deferred:
UK		1			—			(5	)
Non-UK		4			(514	)		167
		5			(514	)		162
Total	$	(260	)	$	(182	)	$	388

Schedule of Provision for Income Taxes as Per UK Federal Income Tax Rates

The Company’s provision for income taxes for the years ended December 31, 2019, 2018 and 2017 was different from the amount computed by applying the statutory UK federal income tax rates to the underlying income/(loss) before income taxes and equity in net income/(loss) of affiliates as a result of the following:

		Year Ended December 31,
(IN MILLIONS)	2019			2018			2017
Income/(loss) before income taxes and equity in net income/(loss) of affiliates	$	(663	)	$	(882	)	$	828
UK statutory tax rate		19.00	%		19.00	%		19.25	%
(Benefit)/provision for income taxes at the UK statutory rate	$	(126	)	$	(168	)	$	159
Impairment of goodwill and long-lived assets		191			268			—
Tax impact on distributions from foreign subsidiaries		4			9			8
Effect of operations in non-UK jurisdictions		32			32			35
Tax impact of global licensing arrangements		(16	)		18			66
Tax impact of intercompany restructuring		—			(142	)		—
U.S. state and local taxation		10			17			23
Base erosion and other anti-abuse tax		35			—			—
Withholding and other taxation		29			28			39
Effect of global financing activities		(7	)		(67	)		(68	)
Changes in estimates for uncertain tax positions and audit settlements		(442	)		25			45
Changes in valuation allowances		(40	)		39			(8	)
Effect of change in deferred tax rates		46			(6	)		7
Tax impact of post-retirement settlements		26			—			—
Tax impact due to US Tax Reform (1)		—			(228	)		104
Other, net		(2	)		(7	)		(22	)
Total (benefit)/provision for income taxes	$	(260	)	$	(182	)	$	388
Effective tax rate (benefit) and expense		(39.2	)%		(20.6	)%		46.9	%

(1)

This includes the impact of BEAT and GILTI for 2018 and 2017.

Components of Current and Non-Current Deferred Income Tax Assets/(Liabilities)

The components of current and non-current deferred income tax assets/(liabilities) were:

(IN MILLIONS)	December 31, 2019			December 31, 2018
Deferred tax assets (on balance):
Net operating loss carryforwards	$	484		$	532
Capital loss carryforwards		50			3
Interest expense limitation		349			301
Employee benefits		59			59
Tax credit carryforwards		186			205
Share-based payments		12			15
Accrued expenses		39			41
Other assets		30			66
Financial instruments		1			—
		1,210			1,222
Valuation allowances		(636	)		(651	)
Deferred tax assets, net of valuation allowances		574			571
Deferred tax liabilities (on balance):
Intangible assets		(892	)		(913	)
Fixed asset and computer software depreciation		(273	)		(241	)
Financial instruments		—			(6	)
Unremitted earnings		(57	)		(61	)
Unrealized gain on investments		(49	)		(49	)
Deferred (revenues)/costs		(5	)		(9	)
Other liabilities		(74	)		(67	)
		(1,350	)		(1,346	)
Net deferred tax liability	$	(776	)	$	(775	)

Schedule of Reconciliation of Beginning and Ending Amount of Gross Uncertain Tax Positions

A reconciliation of the beginning and ending amount of gross uncertain tax positions is as follows:

(IN MILLIONS)	December 31, 2019			December 31, 2018			December 31, 2017
Balance as of the beginning of period	$	572		$	452		$	432
Additions for current year tax positions		2			21			11
Additions for tax positions of prior years		14			108			15
Reductions for lapses of statute of limitations		(424	)		(8	)		(2	)
Reductions for tax positions of prior years		—			(1	)		(4	)
Balance as of the end of the period	$	164		$	572		$	452