Income Taxes

3 Months Ended

Apr. 30, 2023

Income Taxes

Income Taxes

10.Income Taxes

The Company’s provision for income taxes for the three months ended April 30, 2023 and 2022 is based on the estimated annual effective tax rate, in addition to discrete items.

The Company's effective tax rate for the first quarter of FY24 was 29.1%, which differs from the U.S. federal statutory rate of 21% primarily due to rate differentials in foreign tax jurisdictions and the Global Intangible Low-Taxed Income (“GILTI”).

The Company's effective tax rate for the first quarter of FY23 was 20.2%. The Company recorded deferred tax benefits of $0.2 million related to accruals for China social taxes based on our evaluation of the deductibility of these items. Excluding this discrete benefit the effective rate was 32.9% which differs from the U.S. federal statutory rate of 21% primarily due to rate differentials in foreign tax jurisdictions and GILTI.

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. The valuation allowance was $3.6 million at April 30, 2023 and January 31, 2023, respectively.