Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

16. INCOME TAXES

The tax expense and the effective tax rate resulting from operations were as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Loss before income taxes	$	(8,692	)	$	(15,932	)	$	(17,632	)	$	(28,413	)
Income tax expense		397			(95	)		1,421			596
Effective tax rate		(4.57	%)		0.60	%		(8.06	%)		(2.10	%)

The change in the effective tax rate for the three and six months ended June 30, 2023, as compared to three and six months ended June 30, 2022, was mainly driven by the mix of earnings by jurisdiction.

The Company’s recorded effective tax rate is less than the U.S. statutory rate primarily due to recorded valuation allowance in various jurisdictions, current tax expense in certain tax jurisdictions, and foreign tax rate differentials from the U.S. domestic statutory tax rate.

The Company currently has valuation allowances recorded against its deductible temporary differences and net operating loss carryforwards in jurisdictions where the non-realizability of such deferred tax assets is concluded to be more likely than not. Each quarter, the Company evaluates all available evidence to assess the recoverability of its deferred tax assets in each jurisdiction, including significant events and transactions, both positive and negative, and the reversal of taxable temporary differences and forecasted earnings. As a result of the Company’s analysis, management concluded that it is more likely than not that its deferred tax assets will not be realized. Therefore, the Company continues to provide a valuation allowance against its deferred tax assets. The Company continues to monitor available evidence and may reverse some or all of its remaining valuation allowance in future periods, if appropriate.

On August 16, 2022, the Inflation Reduction Act of 2022 (the “Act”) was signed into law. Many of the provisions are not expected to impact the Company. For example, effective January 1, 2023, companies that report over $1 billion in profits to shareholders are required to calculate their tax liability using a 15% corporate alternative minimum tax (CAMT) based on book income. An appliable corporation is liable for the CAMT to the extent that its "tentative minimum tax" exceeds its regular US federal income tax liability plus its liability for the base erosion anti-abuse tax (BEAT). Since the Company is currently under the required profits and gross receipts thresholds for CAMT and BEAT respectively, these two provisions do not currently apply at this time. Additionally, to the extent there are transactions classified as stock buybacks the Company will assess whether the new excise tax imposed by the Act will impact any applicable stock buyback transactions.

In December 2021, the OECD issued model rules for a new global minimum tax framework ("BEPS"). While the overarching framework has been published, the Company is awaiting the enactment of per country legislation and additional detailed guidance to assess the full implication of these rules. In the meantime, the Company is monitoring the BEPS requirements globally and assessing its potential applicability in future tax years.