Income Taxes​

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Arconic’s year-to-date tax provision is comprised of the most recent estimated annual effective tax rate applied to year-to-date pretax ordinary income or loss. The tax impacts of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are recorded discretely in the interim period in which they occur. In addition, the tax provision is adjusted for the interim period impact of non-benefited pretax losses.

For the 2021 nine-month period, the estimated annual effective tax rate, before discrete items, applied to ordinary loss was 17.1% (benefit on loss). This rate differs by 3.9 percentage points from the U.S. federal statutory rate of 21.0% primarily due to estimated U.S. tax on Global Intangible Low-Taxed Income, U.S. tax on foreign earnings, and non-deductible costs, partially offset by the state tax impact of domestic taxable losses.

For the 2020 nine-month period, the estimated annual effective tax rate, before discrete items, applied to ordinary loss was 11.7% (benefit on loss). This rate differs by 9.3 percentage points from the U.S. federal statutory rate of 21.0% primarily due to nondeductible costs in the U.S., U.S. tax on foreign earnings, foreign losses taxed in lower rate jurisdictions, and losses in foreign jurisdictions subject to existing valuation allowances.

The effective tax rate including discrete items was 40.7% and 18.4% in the 2021 third quarter and nine-month period, respectively, and was 66.7% and 12.5% (provision on loss) in the 2020 third quarter and nine-month period, respectively.

The following table details the components of Provision (Benefit) for income taxes:

	Third quarter ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Pretax ordinary income (loss) at estimated annual effective tax rate	$	5	$	2	$	(75)	$	(5)
Impact of change in estimated annual effective tax rate on previous quarter’s pretax income	7		51		—		—
Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized*	—		(48)		(2)		1
Discrete items	(1)		5		(4)		9
Provision (Benefit) for income taxes	$	11	$	10	$	(81)	$	5

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*    The interim period impact related to operational losses in foreign jurisdictions for which no tax benefit is recognized will reverse by the end of the calendar year.