14. Income Taxes

Schlumberger operates in more than 100 tax jurisdictions, where statutory tax rates generally vary from 0% to 40%.

Income from continuing operations before taxes subject to United States and non-United States income taxes for each of the three years ended December 31, were as follows:

(Stated in millions)

	2015			2014		2013
United States.......................................	$	(691	)	$	1,990	$	1,904
Outside United States..................................		3,572			5,649		6,787
	$	2,881		$	7,639	$	8,691

Schlumberger recorded pretax charges of $2.575 billion in 2015 ($883 million in the US and $1.692 billion outside of the US). Schlumberger recorded pretax charges of $1.773 billion in 2014 ($289 million in the US and $1.484 billion outside the US) and net pretax credits of $420 million in 2013 ($53 million of charges in the US and $473 million of net credits outside the US). These charges and credits are included in the table above and are more fully described in Note 3 – Charges and Credits.

The components of net deferred tax assets (liabilities) were as follows:

(Stated in millions)

	2015			2014
Postretirement benefits.............................................	$	266		$	327
Intangible assets.................................................		(1,418	)		(1,435	)
Investments in non-US subsidiaries.....................................		(152	)		(227	)
Fixed assets, net.................................................		(176	)		(331	)
Inventories.....................................................		159			112
Other, net......................................................		454			402
	$	(867	)	$	(1,152	)

The above deferred tax balances at December 31, 2015 and 2014 were net of valuation allowances relating to net operating losses in certain countries of $162 million and $190 million, respectively. Schlumberger generally does not provide income taxes relating to undistributed earnings, as the earnings either would not be taxable when remitted or are considered to be indefinitely reinvested.

The components of Taxes on income were as follows:

(Stated in millions)

	2015			2014			2013
Current:
United States-Federal..................................	$	90		$	718		$	682
United States-State....................................		12			51			60
Outside United States..................................		1,085			1,380			1,211
		1,187			2,149			1,953
Deferred:
United States-Federal..................................	$	(356	)	$	(194	)	$	(109	)
United States-State....................................		(19	)		(9	)		(4	)
Outside United States..................................		(52	)		(12	)		34
Valuation allowance...................................		(14	)		(6	)		(26	)
		(441	)		(221	)		(105	)
	$	746		$	1,928		$	1,848

A reconciliation of the United States statutory federal tax rate (35%) to the consolidated effective tax rate follows:

	2015			2014			2013
US federal statutory rate................................		35	%		35	%		35	%
Non-US income taxed at different rates......................		(13	)		(11	)		(12	)
Charges and credits (See Note 3)..........................		6			3			(2	)
Other............................................		(2	)		(2	)		-
		26	%		25	%		21	%

A number of the jurisdictions in which Schlumberger operates have tax laws that are not fully defined and are evolving. Schlumberger’s tax filings are subject to regular audit by the tax authorities. These audits may result in assessments for additional taxes which are resolved with the authorities or, potentially, through the courts. Tax liabilities are recorded based on estimates of additional taxes that will be due upon the conclusion of these audits. Due to the uncertain and complex application of tax regulations, the ultimate resolution of audits may result in liabilities which could be materially different from these estimates.

A reconciliation of the beginning and ending amount of liabilities associated with uncertain tax positions for the years ended December 31, 2015, 2014 and 2013 is as follows:

(Stated in millions)

	2015			2014			2013
Balance at beginning of year.............................	$	1,402		$	1,452		$	1,453
Additions based on tax positions related to the current year.........		140			154			146
Additions for tax positions of prior years.....................		136			96			109
Additions related to acquisitions...........................		5			43			-
Impact of changes in exchange rates........................		(78	)		(62	)		(47	)
Settlements with tax authorities...........................		(99	)		(27	)		(64	)
Reductions for tax positions of prior years....................		(203	)		(212	)		(109	)
Reductions due to the lapse of the applicable statute of limitations.....		(18	)		(42	)		(36	)
Balance at end of year.................................	$	1,285		$	1,402		$	1,452

The amounts above exclude accrued interest and penalties of $176 million, $243 million and $253 million at December 31, 2015, 2014 and 2013, respectively. Schlumberger classifies interest and penalties relating to uncertain tax positions within Taxes on income in the Consolidated Statement of Income.

The following table summarizes the tax years that are either currently under audit or remain open and subject to examination by the tax authorities in the most significant jurisdictions in which Schlumberger operates:

Brazil......................................................	2010 - 2015
Canada.....................................................	2008 - 2015
Ecuador.....................................................	2012 - 2015
Mexico.....................................................	2007 - 2015
Norway.....................................................	2013 - 2015
Russia......................................................	2013 - 2015
Saudi Arabia.................................................	2001 - 2015
United Kingdom...............................................	2011 - 2015
United States.................................................	2014 - 2015

In certain of the jurisdictions noted above, Schlumberger operates through more than one legal entity, each of which may have different open years subject to examination. The table above presents the open years subject to examination for the most material of the legal entities in each jurisdiction. Additionally, it is important to note that tax years are technically not closed until the statute of limitations in each jurisdiction expires. In the jurisdictions noted above, the statute of limitations can extend beyond the open years subject to examination.