Income Taxes

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



	Year ended March 31, 2017			Period from February 2, 2016 (Date of Inception) to March 31, 2016
Loss before income taxes:
United States	$	(2,924	)	$	—
Switzerland	(29,745		)	—
Bermuda	(50,845		)	(1,657		)
Total loss before income taxes	$	(83,514	)	$	(1,657	)

Current taxes:
United States	$	134		$	—
Switzerland	—			—
Bermuda	—			—
Total current tax expense	134			—
Deferred taxes:
United States	(208		)	—
Switzerland	—			—
Bermuda	—			—
Total deferred tax benefit	(208		)	—
Total income tax benefit	$	(74	)	$	—

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



	Year ended March 31, 2017					Period from February 2, 2016 (Date of Inception) to March 31, 2016
	in 000s			%		in 000s		%
Income tax benefit at Bermuda statutory rate	$	—		—	%	$	—	—	%
Foreign rate differential	(7,592		)	9.09		—		—
Valuation allowance	7,378			(8.83	)	—		—
Other	140			(0.17	)	—		—
Total income tax benefit	$	(74	)	0.09	%	$	—	—	%

The Company's provision for income taxes is based primarily on income taxes in the United States for federal, state and local income taxes. The Company's effective tax rate for the years ended March 31, 2017 and 2016 was 0.09% and 0.00%, respectively, primarily due to the organization of the Company as a Bermuda Exempted Limited Company, for which there is no current tax regime, due to United States permanent unfavorable differences, and a valuation allowance that effectively eliminates the Company's net deferred tax assets in the United States. As of March 31, 2017, the Company had an aggregate income tax receivable of $0.1 million from various federal, state, and local jurisdictions.

Deferred taxes reflect the tax effects of the differences between the amounts records 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, 2017 are as follows (in thousands):



	March 31, 2017			March 31, 2016
Research tax credits	$	163		$	—
Other	300			—
Depreciation	(255		)	—
Swiss net operating loss	6,019			—
Share-based compensation	1,382			—
Subtotal	7,609			—
Valuation allowance	(7,401		)	—
Total deferred tax assets	$	208		$	—

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. As a result of this assessment, a valuation allowance of $1.4 million related to share-based compensation and $6.0 million related to Swiss net operating loss carryforward has been recorded as of March 31, 2017. The Swiss net operating loss carryforward expires in year 2024. The Company believes that it is more likely than not, given the weight of available evidence, that all other deferred tax assets will 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.

The Company files income tax returns in the United States federal, state and local jurisdictions. MSI will file its initial United States federal, state and local income tax returns for the fiscal year ended March 31, 2017 in December 2017. The Company is subject to tax examinations for fiscal year 2016 and forward in all applicable income tax jurisdictions.