The income tax provision recorded within the consolidated statements of earnings differs from the provision determined by applying the U.S. statutory tax rate to pretax earnings as a result of the following:

(a)	Includes enacted regulatory changes during the year in connection with the U.S. Tax Cuts and Jobs Act (TCJA) signed into law in 2017.

The company generally intends to limit distributions from non-U.S. subsidiaries to earnings previously taxed in the U.S., primarily as a result of the transition tax or tax on GILTI incurred pursuant to the TCJA. As of December 31, 2021, the company has $1.8 billion of adjusted retained earnings in non-U.S. subsidiaries. Of these undistributed earnings, $851 million were previously subjected to U.S. federal income tax. The company has accrued approximately $63 million for estimated non-U.S. withholding taxes on portions of the non-U.S. earnings that are not indefinitely reinvested. The company has not provided deferred taxes on any other outside basis differences in its investments in other non-U.S. subsidiaries as these other outside basis differences are indefinitely reinvested. A determination of the unrecognized deferred taxes related to any of these other outside basis differences is not practicable.

Ball’s Serbian and Polish subsidiaries benefit from tax holidays which reduced income taxes during the year by $2 million for each subsidiary. These tax holidays expire during 2031 and 2026 respectively. Several of Ball’s Brazilian subsidiaries benefit from various tax holidays with expiration dates ranging from 2025 to 2032. These tax holidays reduced income tax by $74 million or $0.23 per share, $72 million or $0.22 per share and $62 million or $0.19 per share for 2021, 2020 and 2019, respectively.

Net income tax payments were $136 million, $157 million and $128 million in 2021, 2020 and 2019, respectively.

The significant components of deferred tax assets and liabilities are as follows:


	December 31,
($ in millions)	2021		2020

Deferred tax assets:
Deferred compensation	$	127	$	109
Accrued employee benefits		79		84
Accrued pensions		113		201
Net operating losses, non-U.S. tax credits and other tax attributes		523		440
Deferred interest		102		83
Operating lease liabilities		85		56
Other		180		156
Total deferred tax assets		1,209		1,129
Valuation allowance		(303)		(264)
Net deferred tax assets		906		865
Deferred tax liabilities:
Property, plant and equipment		(509)		(399)
Goodwill and other intangible assets		(543)		(570)
Pension assets		(146)		(106)
Tax on undistributed non-U.S. earnings		(63)		(64)
Operating lease right of use assets		(87)		(54)
Other		(97)		(79)
Total deferred tax liabilities		(1,445)		(1,272)
Net deferred tax asset (liability)	$	(539)	$	(407)

The net deferred tax asset (liability) was included in the consolidated balance sheets as follows:


	December 31,
($ in millions)	2021		2020

Other assets	$	126	$	227
Deferred taxes		(665)		(634)
Net deferred tax asset (liability)	$	(539)	$	(407)

At December 31, 2021, Ball has recorded deferred tax assets related to net operating and capital loss carryforwards of $246 million, deferred interest expense carryforwards of $102 million, and credit carryforwards for foreign taxes, research and development, and various other business credits of $277 million. These attributes are spread across the regions in which the company operates, including Europe, North and Central America, Asia and South America, and generally have expiration periods beginning in 2022 to indefinite. Each has been assessed for realization as of December 31, 2021.

In 2021, the company’s overall valuation allowances increased by a net $39 million. The increase to the valuation allowance was primarily due to enacted tax rate changes in the U.K. The valuation allowance was further increased due to nondeductible U.K. interest expense and operating losses incurred primarily in various U.S. state and non-U.S. jurisdictions, none of which are expected to be utilized in future periods. These increases were partially offset by reductions due to the utilization of previously unrealized operating losses. Ball’s 2021 effective tax rate was impacted by $3 million of the change in the valuation allowance.

In 2020, the company’s overall valuation allowances increased by a net $20 million. The increase to the valuation allowance was primarily due to nondeductible U.K. interest expense and operating losses incurred primarily in various U.S. state and non-U.S. jurisdictions, none of which are expected to be utilized in future periods. Ball’s 2020 effective tax rate was impacted by $17 million of the net change in the valuation allowance.

In 2019, the company’s overall valuation allowances increased by a net $20 million. The increase to the valuation allowance was primarily due to nondeductible U.K. interest expense and operating losses incurred primarily in various U.S. state and non-U.S. jurisdictions, none of which are expected to be utilized in future periods. This increase was partially offset by a reduction due to the disposition of certain Asian subsidiaries. Ball’s 2019 effective tax rate was impacted by $24 million of the net change in the valuation allowance.

A roll forward of the company’s unrecognized tax benefits, as included in other noncurrent liabilities, related to uncertain income tax positions at December 31 follows:


($ in millions)	2021		2020		2019

Balance at January 1	$	55	$	63	$	80
Additions based on tax positions related to the current year		—		1		—
Reductions due to lapse of statute of limitations		(17)		(12)		(16)
Effect of currency exchange rates		(2)		3		(1)
Balance at December 31	$	36	$	55	$	63

The annual provisions for income taxes included a tax benefit related to uncertain tax positions, including interest and penalties, of $19 million in 2021, $14 million in 2020 and $19 million in 2019.

At December 31, 2021, the amounts of unrecognized tax benefits that, if recognized, would reduce tax expense were $44 million, inclusive of interest, penalties and the federal impact of U.S. state items. The company and its subsidiaries file income tax returns in the U.S. federal, various state, local and non-U.S. jurisdictions. The U.S. federal statute of limitations is closed for years prior to 2014. With a few exceptions, the company is no longer subject to examination by state and local tax authorities for years prior to 2014. The company’s significant non-U.S. filings are in Argentina, Brazil, Canada, Chile, Czech Republic, Egypt, France, Germany, Mexico, Paraguay, Poland, Russia, Serbia, Spain, Sweden, Switzerland, Turkey, and the U.K. The company’s non-U.S. statutes of limitations are generally open for years after 2017. At December 31, 2021, the company is either under examination or has been notified of a pending examination by tax authorities in Austria, Brazil, Egypt, France, Germany, Hong Kong, India, Italy, the Netherlands, Saudi Arabia, Switzerland, the U.S., and various U.S. states.

Due primarily to potential expiration of certain statutes of limitations, it is reasonably possible that a decrease in the range of $10 million to $17 million in the total amount of unrecognized tax benefits may occur within the coming year, all of which would reduce income tax expense.

The company recognizes the accrual of interest and penalties related to unrecognized tax benefits in income tax expense. Ball recognized $2 million of tax benefit, $2 million of tax benefit and $3 million of tax benefit in 2021, 2020 and 2019, respectively, for potential interest on these items. At December 31, 2021, 2020 and 2019, the accrual for uncertain tax positions included potential interest expense of $6 million for each year. The company has accrued penalties of $2 million in 2021, $4 million in 2020 and $6 million in 2019.