Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We use the discrete method to determine our quarterly tax provision because small changes in estimated ordinary annual income result in significant changes in our estimated annual effective tax rate. The discrete method treats the year-to-date period as if it was the annual period and determines the income tax expense or benefit on that basis. For the three months ended March 31, 2020, we recognized tax expense of $44 million on a loss before income taxes of $914 million as compared to the three months ended March 31, 2019 where we recognized tax expense of $12 million on a loss before income taxes of $465 million. Tax expense for the three months ended March 31, 2020 includes $20 million to recognize valuation allowance in jurisdictions where we are no longer able to forecast taxable income. Tax expense for the three months ended March 31, 2020 and 2019 also includes withholding taxes, minimum taxes and deemed profit taxes that do not directly correlate to ordinary income or loss. Impairments and other charges did not result in significant tax benefit in either period.

We are routinely under tax examination in various jurisdictions. We cannot predict the timing or outcome regarding resolution of these tax examinations or if they will have a material impact on our financial statements. As of March 31, 2020, we anticipate that it is reasonably possible that our uncertain tax positions of $214 million may decrease by up to $3 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations.

In response to the COVID-19 pandemic, many countries have enacted or are contemplating tax relief measures to provide aid and economic stimulus to companies impacted by the COVID-19 pandemic. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020 in the U.S., includes similar measures to assist individuals and companies that are most affected in the US. These measures may include deferring the due dates of tax payments or other temporary changes to their income and non-income-based tax laws. We are taking advantage of the tax payments deferral in the jurisdictions where available. For the three months ended March 31, 2020, there were no material tax impacts to our financial statements as it relates to COVID-19 measures. We continue to monitor additional legislation and guidance issued by government authorities

around the world.