Taxes on Income

9 Months Ended

Sep. 30, 2023

Taxes on Income

Taxes on Income

16. Taxes on Income

The company’s effective tax rate was 1.0 percent and 12.7 percent for the three and nine months ended September 30, 2023, respectively. As compared to the statutory U.S. tax rate, the effective tax rate for the three and nine months ended September 30, 2023, decreased by 23.8 percent and 9.9 percent, respectively, for research and development credits, and by 21.3 percent and 7.1 percent, respectively, for foreign tax credits. The effective tax rate for the three and nine months ended September 30, 2023, increased by 15.5 percent and 5.1 percent, respectively, for increases in valuation allowances.

The company’s effective tax rate was 8.6 percent and 17.2 percent for the three and nine months ended September 30, 2022, respectively. As compared to the statutory U.S. tax rate, the effective tax rate for the three and nine months ended September 30, 2022, decreased by 10.8 percent and 5.9 percent, respectively, for the sale of the Russian aluminum beverage packaging business, decreased by 5.1 percent and 2.8 percent, respectively, for non-U.S. rate differences net of withholding taxes and reduced by 2.2 percent and 2.6 percent, respectively, for federal tax credits. The effective rate for the three and nine months ended September 30, 2022, increased by 3.8 percent and 3.0 percent, respectively, for U.S. permanent differences.

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 consolidated financial statements beginning in 2024.