Income Taxes

6 Months Ended

Sep. 28, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s effective tax rate for the three and six months ended September 28, 2024 was 309.1% and 155.0%, respectively. This rate differs from the United Kingdom (“U.K.”) federal statutory rate of 25% primarily related to the release of $29 million of an uncertain tax provision related to Italian share-based compensation tax deductions as a result of a recently issued tax ruling for the three and six months ended September 28, 2024.

The Company’s effective tax rate for the three and six months ended September 30, 2023 was 10.9% and 8.6%, respectively. This rate differs from the U.K. federal statutory rate of 25% primarily due to the impact of global financing activities, the release of uncertain tax positions outside the U.S. for the three and six months ended September 30, 2023 and the release of a valuation allowance on Korean deferred tax assets during the six months ended September 30, 2023.

The global financing activities are related to the Company’s 2014 move of its principal executive office from Hong Kong to the U.K. and decision to become a U.K. tax resident. In connection with this decision, the Company funded its international growth strategy through intercompany debt financing arrangements. These debt financing arrangements reside between certain of our U.S. and U.K. subsidiaries. Due to the difference in the statutory income tax rates between these jurisdictions, the Company generally realizes lower effective tax rates compared to its statutory rate as a result of these financing activities.

On August 6, 2024, the United States Treasury and the IRS released proposed regulations that address several long-standing issues related to dual consolidated losses and introduce new rules for disregarded payment losses. If finalized as proposed, the changes related to disregarded payment losses could impact how the Company utilizes certain deductions and losses to offset its U.S. income as part of its global financing activities. The Company will continue to evaluate its impact as further information becomes available.