Income Tax

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

The Inflation Reduction Act of 2022 (“the Act”) was enacted in the U.S. The Act includes law changes relating to tax, climate change, energy and health care. In particular, for tax years ending after December 31, 2022, the Act imposes a 15% minimum tax on adjusted financial statement income for “applicable corporations” with average financial statement income exceeding $1 billion for the previous 3-year period ending in 2022 or after. Based on the current guidance, the Company is not an applicable corporation for 2023. The Act also imposes a 1% excise tax on stock buybacks of a publicly traded corporation. The Act is not expected to have a material impact to the Company’s tax expense.

The effective tax rate for the three and nine months ending September 30, 2023, was 24.2% and 24.9% on pre-tax income. The tax rate was higher than the U.S. statutory rate primarily due to income earned in foreign jurisdictions and adjustments to the valuation allowance. These increases were partially offset with tax benefits received in certain foreign jurisdictions.

The effective tax rate for the three and nine months ending September 30, 2022, was 2.7% and 32.5%. The Company’s effective tax rate for the three and nine months ending September 30, 2022, differed from the U.S. statutory rate of 21% primarily due to U.S. taxation on foreign earnings, income earned in jurisdictions with tax rates greater than the U.S. statutory rate, and adjustments to valuation allowances which were partially offset with adjustments related to tax returns filed during the quarter.