Taxes on Income

6 Months Ended

Jun. 30, 2023

Taxes on Income

Taxes on Income

16. Taxes on Income

The company’s effective tax rate was 17.5 percent and 18.3 percent for the three and six months ended June 30, 2023, respectively. As compared to the statutory U.S. tax rate, the effective tax rate for the three and six months ended June 30, 2023, decreased by 3.6 percent and 3.3 percent, respectively, for research and development credits, and increased by 1.2 percent for state and local taxes, net.

The company’s effective tax rate was negative 0.6 percent and 27.7 percent for the three and six months ended June 30, 2022, respectively. As compared to the statutory U.S. tax rate, the effective tax rate for the three and six months ended

June 30, 2022, decreased by 24.8 percent and increased by 12.1 percent, respectively, for the establishment of a valuation allowance related to the Russian aluminum beverage packaging business, increased by 6.2 percent and decreased by 3.0 percent, respectively, for a reduction in the valuation allowance related to the Indian beverage packaging business, and decreased by 3.0 percent and 1.9 percent, respectively, for equity compensation.

In July 2023, the U.K. enacted minimum tax legislation consistent with the Organization for Economic Co-operation and Development’s (OECD) Pillar Two Framework that was supported by over 130 countries worldwide. The legislation will be effective for the company beginning on January 1, 2024. A significant number of other countries are also moving forward with similar legislation. The company is currently evaluating the potential impact this legislation may have on its financial statements beginning in 2024.