INCOME TAXES

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The following table provides a summary of the Company’s effective tax rate:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Reported tax rate	47.5	%	(4.8)	%	35.3	%	8.2	%

The Company’s effective income tax rates for the three months ended September 30, 2024 and 2023 were 47.5% and (4.8)%, respectively. For the three months ended September 30, 2024, the higher tax rate is primarily due to the limitation of foreign tax credits in the U.S. and the limitation of federal tax credits in Switzerland, caused by lower book income realized during the third quarter. For the three months ended September 30, 2023,the primary drivers of the lower tax rate relate to a reduction to book income in higher-taxed jurisdictions and a $3.3 million benefit related to the filing of prior year tax returns.

The Company’s effective income tax rates for the nine months ended September 30, 2024 and 2023 were 35.3% and 8.2%, respectively. For the nine months ended September 30, 2024, the higher tax rate is primarily due to the limitation of foreign tax credits in the U.S. and the limitation of federal tax credits in Switzerland, caused by lower book income and a $1.9 million shortfall from stock-based compensation, as compared to the prior year. For the nine months ended September 30, 2023, the primary drivers of the lower tax rate relate to a reduction to book income in higher-taxed jurisdictions and a $3.8 million benefit related to the filing of prior year tax returns.

Changes to income tax laws and regulations, in any of the tax jurisdictions in which the Company operates, could impact the effective tax rate. Various governments, both U.S. and non-U.S., are increasingly focused on tax reform and revenue-raising legislation. On August 16, 2022, the Inflation Act was signed into law. The Company did not experience a material impact on the Company’s effective tax rate under the Inflation Act. Further, legislation in foreign jurisdictions may be enacted, in continued response to the base erosion and profit-sharing (“BEPS”) project begun by the Organization for Economic Cooperation and Development (“OECD”).

The OECD released model rules related to a new 15% global minimum tax regime (“Pillar 2”). Several of the jurisdictions that the Company operates in have already adopted some form of the model rules, which could impact the amount of taxes that the Company pays after 2023. However, the rules are complex and provide for delays for implementing the tax during the early transition years, if certain conditions are met. At this time, the Company is projecting an immaterial amount related to Pillar 2 tax liability for the year ending December 31, 2024. Related changes in U.S. and non-U.S. jurisdictions could have an adverse effect on the Company’s effective tax rate.