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INCOME TAXES
 3 Months Ended
Jan. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES
4.    INCOME TAXES
The following table provides details of income taxes:
 Three Months Ended
January 31,
 20232022
in millions, except percentages
Income before taxes$331$264
Provision for income taxes$71$35
Effective tax rate21.5 %13.1 %
The effective tax rate increased 8.4 percentage points from the three months ended January 31, 2022 to the three months ended January 31, 2023 due to an increase in income before taxes, the impacts of U.S. tax research and experimental expenditures capitalization, and a decrease in discrete tax benefits. A provision enacted in the Tax Cuts and Jobs Act of 2017 (the "TCJA") became effective for Keysight on November 1, 2022 requiring U.S. tax research and experimental expenditures to be capitalized and amortized over five years for research activities conducted in the U.S. and over fifteen years for research activities conducted outside the U.S. The capitalization of U.S. tax research and experimental expenditures increases the provision for global intangible low-taxed income (“GILTI”) and is partially offset by an increase in the Foreign-Derived Intangible Income tax deduction.
The income tax expense for the three months ended January 31, 2023 and 2022 included a net discrete benefit of $1 million and $8 million, respectively. The decrease in discrete tax benefit for the three months ended January 31, 2023 was primarily due to a decrease in tax deductions related to stock compensation.
Keysight benefits from tax incentives in several jurisdictions, most significantly in Singapore and Malaysia, that will expire or require renewal at various times in the future. The tax incentives provide lower rates of taxation on certain classes of income and require thresholds of investments and employment in those jurisdictions. The Singapore tax incentive is due for renewal in 2024, and the Malaysia incentive is due for renewal in 2025. We are continuing to evaluate renewal options and the impact of potential outcomes on our effective tax rate. For the three months ended January 31, 2023 and 2022 the impact of the tax incentives decreased the income tax provision by $25 million and $19 million, respectively. The increase in tax benefit for the three months ended January 31, 2023 is primarily due to a change in the jurisdictional mix of non-U.S. earnings, which increased the earnings taxed at incentive tax rates in 2023.
The open tax years for the U.S. federal income tax return and most state income tax returns are from November 1, 2018 through the current tax year. For the majority of our non-U.S. entities, the open tax years are from November 1, 2017 through the current tax year. For certain non-U.S. entities, the tax years remain open, at most, back to the year 2008.
The company is being audited in Malaysia for fiscal year 2008. This tax year pre-dates our separation from Agilent. However, pursuant to the agreement between Agilent and Keysight pertaining to tax matters, as finalized at the time of separation, for certain entities, including Malaysia, any historical tax liability is the responsibility of Keysight. In the fourth quarter of fiscal year 2017, Keysight paid income taxes and penalties of $68 million on gains related to intellectual property rights. The company believes there are numerous defenses to the current assessment; the statute of limitations for the fiscal year 2008 in Malaysia was closed, and the income in question is exempt from tax in Malaysia. The company is disputing this assessment and pursuing all avenues to resolve this issue favorably for the company. Our appeals to both the Special Commissioners of Income Tax and the High Court in Malaysia have been unsuccessful. We have filed a Notice of Appeal with the Court of Appeal, and a hearing is currently scheduled for April 2023.
At this time, management does not believe that the outcome of any future or currently ongoing examination will have a material impact on our consolidated financial statements. We believe that we have an adequate provision for any adjustments that may result from tax examinations. However, the outcome of tax examinations cannot be predicted with certainty. Given the numerous tax years and matters that remain subject to examination in various tax jurisdictions, the ultimate resolution of current
and future tax examinations could be inconsistent with management’s current expectations. If that were to occur, it could have an impact on our effective tax rate in the period in which such examinations are resolved.