Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company is subject to income taxation through certain of its subsidiaries primarily in the United States, China, South Korea and throughout other Asian countries.

The components of income tax expense (benefit) were as follows:

	Year Ended December 31,
(in thousands of US dollars)	2021		2020		2019
Current taxes:
United States	$	2	$	1	$	144
Foreign - Korea	5		—		(641)
Foreign - Other	995		291		256
Current taxes	1,002		292		(241)
Deferred taxes:
United States	—		—		—
Foreign - Korea	—		—		—
Foreign - Other	—		—		—
Deferred taxes	—		—		—
Income tax expense (benefit)	$	1,002	$	292	$	(241)

The components of loss before income taxes are as follows:

	Year Ended December 31,
(in thousands of US dollars)	2021		2020		2019
United States	$	(296,529)	$	(8,771)	$	(109,109)
Foreign - Korea	(1,226,675)		(455,683)		(589,358)
Foreign - Other	(18,384)		1,589		1,341
Loss before income taxes	$	(1,541,588)	$	(462,865)	$	(697,126)

The reconciliation of federal statutory income tax rate to our effective income tax rate was as follows:

	Year Ended December 31,
	2021		2020		2019
Tax calculated at statutory tax rate	21.00	%	21.00	%	21.00	%
Statutory rate difference	2.83	%	3.01	%	(2.40	%)
Change in valuation allowances	(25.83	%)	(24.97	%)	(20.18	%)
Consolidated eliminations	—	%	—	%	1.27	%
Other	1.94	%	0.90	%	0.34	%
Effective tax rate expressed in %	(0.06	%)	(0.06	%)	0.03	%

The Company’s resulting effective tax rate differs from the applicable statutory rate primarily due to the valuation allowance against its deferred tax assets.

The income tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities were as follows:

(in thousands of US dollars)	December 31, 2021		December 31, 2020
Deferred tax assets
Provision and allowances	$	43,156	$	48,162
Depreciation	5,212		—
Accrued expenses	43,223		19,936
Amortization	49,529		69,437
Defined severance benefits	68,421		39,827
Lease liabilities	361,420		257,855
Net operating loss carryforwards	1,019,583		767,740
Tax credits	23,066		15,079
Other	6,795		275
Total deferred tax assets	1,620,405		1,218,311
Less: valuation allowance	(1,284,380)		(975,187)
Total deferred tax assets net of valuation allowance	$	336,025	$	243,124
Deferred tax liabilities
Prepaid expenses	$	(88)	$	(438)
Accrued income	(1,745)		(422)
Depreciation	—		(1,860)
Leasehold improvements	—		(2,973)
Lease asset	(333,965)		(237,131)
Loan payable	(89)		(277)
Other	(138)		(23)
Total deferred liabilities	(336,025)		(243,124)
Net deferred tax assets/(liabilities)	$	—	$	—

The Company evaluates its deferred tax assets to determine if a valuation allowance is required to reduce its deferred tax assets to an amount expected to be realized. Realization of the Company’s deferred tax assets is dependent on the generation of future taxable income. In considering the need for a valuation allowance, the Company considers its historical, as well as future projected taxable income, along with other positive and negative evidence in assessing the realizability of its deferred tax assets. The Company’s valuation allowance was $1.3 billion and $975 million as of December 31, 2021 and 2020, respectively. The net change in the total valuation allowance was an increase of $309 million and $253 million in 2021 and 2020, respectively, primarily due to increased net operating loss carryforwards and lease liabilities.

At December 31, 2021, the Company has net operating loss carryforwards for corporate income tax purposes of $3.9 billion in Korea, which are available to offset future corporate taxable income, if any, and expire between 2024 and 2036. The Company has net operating loss carryforwards for corporate income tax purposes of $373 million in the United States, of which $18 million expires between 2034 and 2037 and the remaining $355 million that can be carried over indefinitely. In addition, the Company has corporate tax credit carryforwards of $23 million in Korea which are available to reduce future corporate regular income taxes and expires between 2025 and 2031.

Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. The impacts of uncertain tax positions are recognized only after determining a more-likely-than-not probability that the uncertain tax positions will not withstand challenge, if any, from the relevant taxing authorities. The Company did not have any material uncertain tax positions as of December 31, 2021 and 2020.

The open tax years for the Company’s major tax jurisdictions are 2018 - 2021 for the United States and 2016 - 2021 for Korea.