Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Schedule of earnings (loss) from continuing operations before income taxes

The components of our loss before income taxes are as follows:

	Year ended December 31,
	2019			2018			2017
	in millions
Domestic (a)	$	(46.0	)	$	(32.5	)	$	—
Foreign (b) (c)	(234.6		)	(552.2		)	(651.2		)
Total	$	(280.6	)	$	(584.7	)	$	(651.2	)

(a) Liberty Latin America is considered a stand-alone Bermuda entity.

(b) Amounts for the years ended December 31, 2019 and 2018 include impairment charges at our Panamanian reporting unit of $182 million and $608 million, respectively. The amount for the year ended December 31, 2017 includes impairment charges of $211 million, $191 million, $113 million and $97 million at our Puerto Rico, Trinidad and Tobago, British Virgin Islands and Bahamas reporting units, respectively. For additional information regarding asset impairments, see note 9.

(c)

For the year ended December 31, 2019, material jurisdictions that comprise the “foreign” component of our loss before income taxes include Bahamas, Barbados, Chile, Costa Rica, Jamaica, the Netherlands, Panama, Puerto Rico, Trinidad, the U.K. and the U.S. For the year ended December 31, 2018, material jurisdictions that comprise the “foreign” component of our loss before income taxes include Barbados, Chile, the Netherlands, Panama, Puerto Rico and the U.K. For the year ended December 31, 2017, material jurisdictions that comprise the “foreign” component of our loss before income taxes include Bahamas, Barbados, Chile, Jamaica, the Netherlands, Panama, Puerto Rico, the U.K. and the U.S.

Schedule of income tax benefit (expense)

Income tax benefit (expense) consists of:

	Current			Deferred		Total
	in millions
Year ended December 31, 2019:
Domestic	$	—		$	—	$	—
Foreign	65.5			32.7		98.2
Total	$	65.5		$	32.7	$	98.2
Year ended December 31, 2018:
Domestic	$	—		$	—	$	—
Foreign	(84.0		)	32.9		(51.1		)
Total	$	(84.0	)	$	32.9	$	(51.1	)
Year ended December 31, 2017:
Domestic	$	—		$	—	$	—
Foreign	(282.6		)	135.1		(147.5		)
Total	$	(282.6	)	$	135.1	$	(147.5	)

Schedule of effective income tax rate reconciliation

Income tax benefit (expense) attributable to our earnings (loss) before income taxes differs from the amounts computed by using the applicable tax rate as a result of the following:

	Year ended December 31,
	2019			2018			2017
	in millions
Computed expected tax benefit (a)	$	—		$	—		$	—
Permanent differences (b)	(13.9		)	(23.3		)	(118.5		)
Basis and other differences in the treatment of items associated with investments in Liberty Latin America entities	19.9			0.4			5.5
Increases in valuation allowances	(60.9		)	(23.8		)	(59.0		)
International rate differences (a) (c)	56.0			130.3			116.4
Changes in uncertain tax positions	161.7			8.9			(54.9		)
Enacted tax law and rate changes (d) (e) (f) (g) (h) (i)	11.3			1.5			83.7
Effect of non-deductible goodwill impairments	(43.8		)	(157.0		)	(101.9		)
Other, net	(32.1		)	11.9			(18.8		)
Total income tax benefit (expense)	$	98.2		$	(51.1	)	$	(147.5	)

(a) On July 11, 2017, Liberty Latin America was formed as a corporation in Bermuda where the company is exempt from income taxes on ordinary income and capital gains, and therefore has a “statutory” or “expected” tax rate of 0% in 2019, 2018 and 2017. The majority of our subsidiaries operate in jurisdictions where income tax is imposed at local applicable rates, resulting in “international rate differences,” as shown in the table above that reflect the computed tax benefit (expense) of pre-tax book income (loss) in the respective taxable jurisdiction.

(b) Permanent differences primarily relate to various non-taxable income or non-deductible expenses, such as Caricom treaty income, limitations on deductible management fees, or executive compensation, among others.

(c) The 2019 corporate tax rates applicable to our primary tax jurisdictions are as follows: Chile, 27%; Puerto Rico, 37.5%; the U.K., 19%; the Netherlands, 25%; Panama, 25%; and the U.S., 21%.

(d) During 2018, legislation was enacted that changed the income tax rate in Barbados from 25.0% to 30.0% on Regular Barbados Companies. Substantially all of the impact of this rate change on our deferred tax balances was recorded during the fourth quarter of 2018 when the change in law was enacted. During 2019, legislation was enacted that changed the income tax rate in Barbados from 30.0% on Regular Business Companies to a regressive tax rate ranging from 5.5% to 1% applicable to all Barbados companies, dependent upon taxable income levels. Substantially all of the impact of this rate change on our deferred tax balances was recorded during the first quarter of 2019 when the change in law was enacted.

(e) On December 27, 2019, legislation was enacted in Colombia that replaces tax reform which had previously been enacted in 2018 but had been declared unconstitutional due to procedural flaws. The legislation confirms provisions from the original 2018 reform, including a phasing down of the corporate tax rates through 2022, whereby the rate will be 30% going forward. Substantially all of the impact of this rate change on our deferred tax balances was recorded during the fourth quarter of 2019 when the change in law was enacted.

(f) On December 10, 2018, legislation was enacted that changed the total corporate income tax rate in Puerto Rico from 39.0% to 37.5% for tax years beginning after December 31, 2018. Substantially all of the impact of this rate change on our deferred balances was recorded during the fourth quarter of 2018 when the change in law was enacted.

(g) On January 1, 2017, legislation was enacted that changed the income tax rate in Trinidad and Tobago from 25.0% to 30.0%. Substantially all of the impact of this rate change on our deferred tax balances was recorded during the first quarter of 2017 when the change in tax law was enacted.

(h) On December 22, 2017, the Tax Cuts and Jobs Act legislation was enacted in the U.S., which permanently reduced the corporate income tax rate to 21.0% (effective January 1, 2018), among other corporate income tax changes. Substantially all of the impact of this rate change on our U.S. deferred tax balances was recorded during the fourth quarter of 2017 when the change in tax law was enacted.

(i)

The corporate tax rate applicable to our Chilean operations increased to 25.5% in 2017. In 2018 and future years, the tax rate is 27.0%. As of 2017, the 35.0% withholding tax applicable to payments made by our Chilean operations to non-resident shareholders will be based only on actual distributions to shareholders and only 65.0% of the actual corporate tax paid by our Chilean operations will be available to be used as a credit against this withholding tax. In the case of shareholders residing in countries that have tax treaties in force with Chile, there will be a full credit for the corporate tax paid.

Schedule of deferred tax assets and deferred tax liabilities

The components of our deferred tax assets (liabilities) are as follows:

	December 31,
	2019			2018
	in millions
Deferred tax assets	$	55.7		$	144.7
Deferred tax liabilities	(401.8		)	(543.0		)
Net deferred tax liability	$	(346.1	)	$	(398.3	)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:

	December 31,
	2019			2018
	in millions
Deferred tax assets:
Net operating losses, credits and other carryforwards	$	1,520.2		$	1,414.9
Unrealized gains and losses	64.9			68.8
Accrued expenses	23.7			41.9
Other future deductible amounts	2.3			5.7
Deferred tax assets	1,611.1			1,531.3
Valuation allowance	(1,402.8		)	(1,308.9		)
Deferred tax assets, net of valuation allowance	208.3			222.4
Deferred tax liabilities:
Investments	(224.1		)	(231.6		)
Intangible assets	(168.6		)	(197.5		)
Property and equipment, net	(158.1		)	(173.5		)
Un-remitted foreign earnings	(3.1		)	(18.1		)
Other future taxable amounts	(0.5		)	—
Deferred tax liabilities	(554.4		)	(620.7		)
Net deferred tax liability	$	(346.1	)	$	(398.3	)

Schedule of valuation allowances

The changes in our valuation allowances are summarized below: 

	Year ended December 31,
	2019		2018		2017
	in millions
Balance at beginning of period	$	1,308.9	$	1,282.2	$	1,328.4
Net tax expense related to operations	60.9		23.8		59.0
Translation adjustments	8.8		2.9		26.1
Business acquisitions and other	24.2		—		(131.3		)
Balance at end of period	$	1,402.8	$	1,308.9	$	1,282.2

Schedule of tax loss carryforwards and related tax assets

The significant components of our tax loss carryforwards and related tax assets at December 31, 2019 are as follows:

Country	Tax loss carryforward		Related tax asset		Expiration date
	in millions
U.K.:
Amount attributable to capital losses	$	4,924.2	$	837.1	Indefinite
Amount attributable to net operating losses	1,358.8		230.1		Indefinite
Barbados	1,088.0		28.6		2020 - 2026
Jamaica	448.7		148.7		Indefinite
Curacao	207.1		45.6		2020 - 2029
U.S.	117.2		29.3		2028 - 2038
Puerto Rico	31.3		10.2		2025 - 2029
Chile	22.6		6.1		Indefinite
Other	219.1		53.7		Various
Total	$	8,417.0	$	1,389.4

Schedule of unrecognized tax benefits

The changes in our unrecognized tax benefits are summarized below: 

	Year ended December 31,
	2019			2018			2017
	in millions
Balance at January 1	$	249.0		$	264.5		$	182.3
Additions for tax positions of prior years	20.3			26.2			67.6
Effects of business acquisitions	3.1			—			—
Additions based on tax positions related to the current year	1.0			29.6			24.0
Lapse of statute of limitations	(2.7		)	(10.7		)	(5.9		)
Foreign currency translation	(11.5		)	(29.9		)	17.8
Decrease for settlement with tax authorities	(42.0		)	—			(1.0		)
Reductions for tax positions of prior years	(153.1		)	(30.7		)	(20.3		)
Balance at December 31	$	64.1		$	249.0		$	264.5