Provision for income taxes. The components of Income (loss) before income taxes were as follows:

	2021		2020			2019
Current:
Federal	$	8	$	2		$	(4	)
Foreign		473		211			404
State and local		1		—			—
		482		213			400
Deferred:
Federal		6		—			2
Foreign		141		(26	)		13
State and local		—		—			—
		147		(26	)		15
Total	$	629	$	187		$	415

A reconciliation of the U.S. federal statutory rate to Alcoa’s effective tax rate was as follows:

	2021			2020			2019
U.S. federal statutory rate		21.0	%		21.0	%		21.0	%
Changes in valuation allowances		23.4			168.3			(70.3	)
Taxes on foreign operations—rate differential		10.8			34.5			(19.3	)
Impacts of the TCJA		2.0			(88.8	)		5.0
Tax on foreign operations—other		1.7			(0.7	)		(2.7	)
Noncontrolling interest		0.5			1.6			(6.8	)
Non-deductible losses on foreign divestitures		—			—			(23.1	)
Adjustment of prior year income taxes		—			(2.5	)		(1.1	)
Uncertain tax positions		—			(21.5	)		(0.6	)
Equity (loss) income		(2.5	)		2.0			(1.9	)
Tax holidays		(2.8	)		(1.9	)		2.0
Other		(1.6	)		(3.9	)		2.9
Effective tax rate		52.5	%		108.1	%		(94.9	)%

In the fourth quarter of 2020, the Supreme Court of Spain ruled in favor of Alcoa regarding the 2006 through 2009 tax year assessment. As a result, the reserve for Uncertain tax positions that was established in 2018 has been released. Refer to the Tax Matters section in Note S for further information.

On December 22, 2017, U.S. tax legislation known as the U.S. Tax Cuts and Jobs Act of 2017 (the TCJA) was enacted. In 2018, the Company made an accounting policy election to include as a period cost the tax impact generated by including Global Intangible Low-Taxed Income provisions (GILTI) in U.S. taxable income. During 2020, the U.S. Treasury Department finalized regulations

implementing the GILTI provisions of the TCJA. Included in these regulations is an exclusion from GILTI for income subject to a high rate of foreign tax, which permits taxpayers to elect to apply the exception to previously filed tax returns. During 2020, an amended tax return was filed for 2018 to make this election. As a result, the Company recorded a tax benefit of ($138) in 2020 to reflect the re-establishment of certain U.S. Federal net operating loss carryforwards and a corresponding tax charge of $138 to record a full valuation allowance against the increased deferred tax asset.

Certain income earned by AWAB is eligible for a tax holiday, which decreases the tax rate on this income from 34% to 15.25%, which will result in future cash tax savings. The holiday related to production at the Alumar refinery will end on December 31, 2027, and the holiday related to the operation of the Juruti (Brazil) bauxite mine will end on December 31, 2026. In 2020 and 2019, deferred tax assets expected to reverse in the holiday period were revalued at the holiday rate. This resulted in a discrete income tax charge of $15 and $7 in 2020 and 2019, respectively. In 2021, it was determined that the deferred taxes associated with the tax holiday would be fully exhausted within the holiday period. These amounts were therefore maintained on the balance sheet at the holiday tax rate.

Certain components of the 2019 restructuring charges resulting from the MRC divestiture and the Avilés and La Coruña facilities curtailment and subsequent divestiture are not deductible for tax purposes. These amounts are $65 for MRC and $35 for Avilés and La Coruña combined and are included in Non-deductible losses on foreign divestitures in the above table. See Note C for additional information on the divestiture charges.

Deferred income taxes. The components of deferred tax assets and liabilities based on the underlying attributes without regard to jurisdiction were as follows:

	2021					2020
December 31,	Deferred tax assets			Deferred tax liabilities		Deferred tax assets			Deferred tax liabilities
Tax loss carryforwards	$	1,554		$	—	$	1,668		$	—
Employee benefits		409			—		711			—
Derivatives and hedging activities		345			—		214			—
Loss provisions		214			—		183			—
Depreciation		128			425		66			434
Investment basis differences		117			—		139			—
Interest		105			1		60			2
Lease assets and liabilities		26			22		37			36
Tax credit carryforwards		26			—		27			—
Deferred income/expense		2			135		22			116
Other		38			—		41			2
		2,964			583		3,168			590
Valuation allowance		(2,062	)		—		(2,127	)		—
Total	$	902		$	583	$	1,041		$	590

The following table details the expiration periods of the deferred tax assets presented above:

December 31, 2021	Expires within 10 years			Expires within 11-20 years			No expiration			Other			Total
Tax loss carryforwards	$	232		$	366		$	956		$	—		$	1,554
Tax credit carryforwards		17			9			—			—			26
Other		—			—			265			1,119			1,384
Valuation allowance		(249	)		(374	)		(958	)		(481	)		(2,062	)
Total	$	—		$	1		$	263		$	638		$	902

Deferred tax assets with no expiration may still have annual limitations on utilization. Other represents deferred tax assets whose expiration is dependent upon the reversal of the underlying temporary difference.

The total deferred tax asset (net of valuation allowance) is supported by projections of future taxable income exclusive of reversing temporary differences and taxable temporary differences that reverse within the carryforward period. The composition of Alcoa’s net deferred tax asset by jurisdiction as of December 31, 2021 was as follows:

	Domestic			Foreign			Total
Deferred tax assets	$	1,066		$	1,898		$	2,964
Valuation allowance		(965	)		(1,097	)		(2,062	)
Deferred tax liabilities		(100	)		(483	)		(583	)
Total	$	1		$	318		$	319

The Company has several income tax filers in various foreign countries. Of the $318 net deferred tax asset included under the Foreign column in the table above, approximately 85% relates to six of Alcoa’s income tax filers (the “Foreign Filers”) as follows: a $148 net deferred tax asset for Alcoa Canada Company in Canada; a $141 net deferred tax asset for Alcoa Alumínio S.A. in Brazil; a $68 net deferred tax asset for AWAB in Brazil; a $67 net deferred tax asset for Alcoa Lauralco Management Company in Canada; a $34 net deferred tax asset for Alcoa Wolinbec Company in Canada; and, a $182 net deferred tax liability for AofA in Australia.

The future realization of the net deferred tax asset for each of the Foreign Filers was based on projections of the respective future taxable income (defined as the sum of pretax income, other comprehensive income, and permanent tax differences), exclusive of reversing temporary differences and carryforwards. The realization of the net deferred tax assets of the Foreign Filers is not dependent on any future tax planning strategies.

The Foreign Filers do not have a history of tax loss carryforwards expiring unused. Additionally, tax loss carryforwards have an infinite life under the income tax code in Brazil. However, utilization of an existing tax loss carryforward is limited to 30% of taxable income in a particular year in Brazil.

Accordingly, management concluded that the net deferred tax assets of the Foreign Filers will more likely than not be realized in future periods, resulting in no need for a partial or full valuation allowance as of December 31, 2021.

In December 2021, Alcoa recorded a valuation allowance of $103 against the net deferred tax assets of Alúmina Española, S.A. (Española). Management concluded that it is more likely than not that Española’s net deferred tax assets, which consist primarily of tax loss carryforwards, will not be realized as the entity’s sole operating asset, the San Ciprián refinery, is in a three-year cumulative loss position for the period ended December 31, 2021. This cumulative loss position is the result of recent operating losses due to the high energy costs in Spain and the impact of the refinery workers’ strike on the fourth quarter of 2021. Despite recent favorable increases in the sales price of alumina, management has forecasted operating losses for Española for the foreseeable future due to the high energy costs in Spain and increases in raw materials costs, resulting in a need for a full valuation allowance as of December 31, 2021.

December 31,	2021			2020			2019
Balance at beginning of year	$	(2,127	)	$	(1,778	)	$	(1,684	)
Establishment of new allowances⁽¹⁾		(103	)		—			—
Net change to existing allowances⁽²⁾		139			(315	)		(101	)
Foreign currency translation		29			(34	)		7
Balance at end of year	$	(2,062	)	$	(2,127	)	$	(1,778	)

Undistributed net earnings. Certain earnings of Alcoa’s foreign subsidiaries are deemed to be permanently reinvested outside the United States. The cumulative amount of Alcoa’s foreign undistributed net earnings deemed to be permanently reinvested was approximately $2,377 as of December 31, 2021. Alcoa Corporation has several commitments and obligations related to the Company’s operations in various foreign jurisdictions; therefore, management has no plans to distribute such earnings in the foreseeable future. Alcoa Corporation continuously evaluates its local and global cash needs for future business operations and anticipated debt facilities, which may influence future repatriation decisions. If these earnings were distributed in the form of dividends or otherwise, we could be subject to foreign income or withholding taxes and state income taxes. Due to the uncertainty of the manner in which the undistributed earnings would be brought back to the United States and the tax laws in effect at that time, it is not practicable to estimate the tax liability that might be incurred if such earnings were remitted to the U.S.

Unrecognized tax benefits. Alcoa and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various foreign and U.S. state jurisdictions. With few exceptions, the Company is not subject to income tax examinations by tax authorities for years prior to 2014. The U.S. federal income tax filings of the Company’s U.S. consolidated tax group have been examined through the 2018 tax year. Foreign jurisdiction tax authorities are in the process of examining income tax returns of several of Alcoa’s subsidiaries for various tax years. Excluding the Australia tax matter discussed in Note S, the period under foreign examination includes the income tax years from 2009 through 2020. For U.S. state income tax purposes, the Company and its subsidiaries remain subject to income tax examinations for the 2017 tax year and forward.

In the third quarter of 2020, AofA paid approximately $74 (A$107) to the ATO related to the tax dispute described in Note S. Upon payment, AofA recorded a noncurrent prepaid tax asset, as the Company continues to believe it is more likely than not that AofA’s tax position will be sustained and therefore is not recognizing any tax expense in relation to this matter. In accordance with Australian tax laws, the initial interest assessment and additional interest are deductible against AofA’s taxable income resulting in approximately $169 (A$219) and $14 (A$19) of lower cash tax payments in the second half of 2020 and the year-ended December 31, 2021, respectively. Interest compounded in future years is also deductible against AofA’s income in the respective periods. If AofA is ultimately successful, the interest deduction would become taxable as income in the year the dispute is resolved. In addition, should the ATO decide in the interim to reduce any interest already assessed, the reduction would be taxable as income at that point in time. During 2021, AofA continued to record its tax provision and tax liability without effect of the ATO assessment, since it expects to prevail. The tax payable will remain on AofA’s balance sheet as a noncurrent liability, increased by the tax effect of subsequent periods’ interest deductions, until dispute resolution, which is expected to take several years. The noncurrent liability resulting from the cumulative interest deductions was approximately $174 (A$238) and $169 (A$219) at December 31, 2021 and 2020, respectively.

The reserve balance for unrecognized tax benefits is included in Noncurrent income taxes on the Consolidated Balance Sheet. A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and penalties) was as follows:

December 31,	2021		2020			2019
Balance at beginning of year	$	4	$	29		$	30
Reductions for tax positions of prior years		—		(26	)		—
Foreign currency translation		—		1			(1	)
Balance at end of year	$	4	$	4		$	29

For all periods presented, a portion of the balance at end of year pertains to state tax liabilities, which are presented before any offset for federal tax benefits. The effect of unrecognized tax benefits, if recorded, that would impact the annual effective tax rate for 2021, 2020, and 2019 would be 0%, 3%, and (7)%, respectively, of pretax book (loss) income. In 2018, the Company recorded a charge of $30 (€26), including $10 (€9) for interest, in Provision for income taxes on the accompanying Statement of Consolidated Operations to establish a liability for its 49% share of the estimated loss on a disputed income tax matter (see Spain in the Tax section of Note S). In 2020, the Company received a favorable final ruling in the Supreme Court of Spain on the Spain tax matter and recorded income of $32 (€26) from the reversal of the 2018 entry and the interest expense accrued through 2019. This change is reflected in the above table as Reductions for tax positions of prior years in the amount of $21 (€17), which is exclusive of interest previously charged to expense. The remainder of the change in Reductions for tax positions of prior years is primarily related to changes in Brazil income tax positions. There were no material changes in Reductions for tax positions of prior years in 2021. Alcoa does not anticipate that changes in its unrecognized tax benefits will have a material impact on the Statement of Consolidated Operations during 2022.

It is the Company’s policy to recognize interest and penalties related to income taxes as a component of the Provision for income taxes on the accompanying Statement of Consolidated Operations. In 2021, 2020, and 2019 Alcoa recognized $0, $0, and $2, respectively, in interest and penalties. Due to the expiration of the statute of limitations, settlements with tax authorities, and refunded overpayments, the Company also recognized interest income of $0, $13, and $1 in 2021, 2020, and 2019, respectively. As of December 31, 2021 and 2020, the amount accrued for the payment of interest and penalties was $2 and $2, respectively.