Income Taxes

The loss before income taxes and the related tax expense are as follows (in thousands):



	Year ended March 31, 2020			Year ended March 31, 2019
Loss before income taxes:
United States	$	(4,403	)	$	(11,345	)
Switzerland	(62,520		)	(111,383		)
Bermuda ⁽¹⁾	(5,216		)	(6,206		)
Other ⁽²⁾	(51		)	2
Total loss before income taxes	$	(72,190	)	$	(128,932	)
Current taxes:
United States	$	403		$	123
Switzerland	—			—
Bermuda ⁽¹⁾	—			—
Other ⁽³⁾	35			10
Total current tax expense	438			133
Deferred taxes:
United States	—			—
Switzerland	—			—
Bermuda ⁽¹⁾	—			—
Other ⁽²⁾	—			—
Total deferred tax expense	—			—
Total income tax expense	$	438		$	133

⁽¹⁾Bermuda entity is centrally controlled and managed in the United Kingdom.
⁽²⁾AHL (United Kingdom) and ASEU (Ireland).
⁽³⁾Includes state income tax expense.

A reconciliation of income tax benefit computed at the Bermuda statutory rate to income tax expense reflected in the financial statements is as follows (in thousands):



	Year Ended					Year Ended
	March 31, 2020					March 31, 2019
	$			%		$			%
Income tax benefit at Bermuda statutory rate	$	—		—	%	$	—		—	%
Foreign rate differential ⁽¹⁾	(15,415		)	21.35		(14,653		)	11.37
Valuation allowance	16,759			(23.21	)	29,962			(23.24	)
Research and development credit	(621		)	0.86		(1,437		)	1.12
Research and development true-up	(285		)	0.39		318			(0.25	)
Switzerland rate change	—			—		(14,057		)	10.90
Total income tax expense	$	438		(0.61	)%	$	133		(0.10	)%

⁽¹⁾ Primarily related to current tax on United States operations including permanent and temporary differences, Swiss net operating losses and United Kingdom taxation of the parent company.

The Company is not subject to taxation under the laws of Bermuda since it was organized as a Bermuda Exempted Limited Company, for which there is no current tax regime. The Company's provision for income taxes is primarily federal, state and local taxes in the United States. The Company's effective tax rates of (0.61)% and (0.10)% , respectively, for the years ended March 31, 2020 and March 31, 2019 differ from the Bermuda federal statutory rate of 0% primarily due to the U.S. permanent unfavorable tax differences, stock compensation deductions and a valuation allowance that effectively eliminates the Company's net deferred tax assets.

On October 24, 2016, the FASB issued ASU No. 2016-16, which eliminates the prohibition of immediate recognition of current and deferred income tax impact for all intra-entity asset transfers, except for inventory. The Company adopted ASU No. 2016-16 in the year ended March 31, 2019 and recognized a deferred tax asset of $3.8 million upon adoption with a corresponding valuation allowance of $3.8 million, which was subsequently impaired.

On March 27, 2020, the United States government enacted the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) which includes numerous modifications to income tax provisions, including a limitation on business interest expense and net operating loss provisions and the acceleration of alternative minimum tax credits. Given the Company's history of losses, the CARES Act is not expected to have a material impact on its income tax positions.

As of March 31, 2020, the Company had an aggregate tax receivable of $1.7 million from various federal, state and local jurisdictions. Deferred taxes reflect the tax effects of the differences between the amounts recorded as assets and liabilities for financial reporting purposes and the comparable amounts recorded for income tax purposes. Significant components of the deferred tax assets (liabilities) at March 31, 2020 and 2019 are as follows (in thousands):



	March 31, 2020			March 31, 2019
Deferred tax assets:
Research tax credits	$	10,782		$	9,876
Intangibles	6,738			5,995
Other	78			18
Net operating loss	160,319			144,866
Share-based compensation	10,738			10,249
Lease liability	206			—
Subtotal	188,861			171,004
Valuation allowance	(187,762		)	(171,004		)
Deferred tax liabilities:
Right of use	(334		)	—
Other	(765		)	—
Total net deferred tax assets	$	—		$	—

The Company has net operating losses in the United States, Switzerland, the United Kingdom and Ireland in the amounts of $102 thousand, $1.21 billion, $11.4 million and $13 thousand, respectively. The United States federal net operating loss can be carried forward indefinitely with utilization limited to 80% of future taxable income for tax years beginning after January 1, 2021. The Switzerland net operating loss will begin to expire as of March 31, 2025. The United Kingdom net operating loss can be carried forward indefinitely with an annual limitation on utilization. As of March 31, 2020, the Company has federal research and development carryforwards of approximately $10.8 million. If not utilized, the research and development credit carryforwards will start to expire in 2038.

The Company assesses the realizability of the deferred tax assets at each balance sheet date based on available positive and negative evidence in order to determine the amount which is more likely than not to be realized and record a valuation allowance as necessary. Due to the Company's cumulative loss position which provides significant negative evidence difficult to overcome, the Company has recorded a full valuation allowance of $187.8 million as of March 31, 2020, representing the portion of the deferred tax asset that is not more likely than not to be realized. The Company will continue to assess the realizability of deferred tax assets at each balance sheet date in order to determine the proper amount, if any, required for a valuation allowance.

There are outside basis differences related to the Company's investment in subsidiaries for which no deferred taxes have been recorded as these would not be subject to tax on repatriation as Bermuda has no tax regime for Bermuda exempted limited companies, and the United Kingdom tax regime relating to company distributions and sales generally provides for exemption from tax for most overseas profits, subject to certain exceptions.

The Company is subject to tax and files income tax returns in the United Kingdom, Switzerland, Ireland and the United States federal and United States state and local jurisdictions. The Company is subject to tax examinations for tax years ended March 31, 2016 and forward in all applicable income tax jurisdictions. Tax audits and examinations can involve complex issues, interpretations and judgments. The resolution of matters may span multiple years particularly if subject to litigation or negotiation. The Company believes it has appropriately recorded its tax position using reasonable estimates and assumptions, however the potential tax benefits may impact the results of operations or cash flows in the period of resolution, settlement or when the statutes of limitations expire. There are no uncertain tax benefits recorded as of March 31, 2020.