
	Year Ended December 31,
	2020			2019		2018
The components of the income tax provision w ere as follows:
Federal	$	28,385		$	7,009	$	27,277
State		4,243			3,329		(11,964	)
Foreign		59,408			66,083		70,634

Total current tax provision	$	92,036		$	76,421	$	85,947

Federal	$	(8,244	)	$	6,913	$	(3,256	)
State		(506	)		1,253		2,247
Foreign		6,057			1,454		3,414

Total deferred tax provision		(2,693	)		9,620		2,405

Total provision	$	89,343		$	86,041	$	88,352

The differences between income taxes computed at the United States statutory rate and the provision for income taxes are summarized as follows for the years ended December 31, 2020, 2019 and 2018 (in thousands):


	Year Ended December 31,
	2020			2019			2018
Federal tax computed at U.S. statutory income tax rate	$	128,292		$	142,430		$	143,251
Enactment of the 2017 Tax Cuts and Jobs Act		—			—			(6,059	)
Foreign currency exchange impact on distributed earnings		—			(3,229	)		7,495
GILTI, net of foreign tax credits		13,319			10,523			13,727
State income tax, net of federal income tax benefit		2,415			3,459			2,910
Net effect of foreign operations		(48,962	)		(52,727	)		(57,003	)
Effect of stock-based compensation		(6,798	)		(9,211	)		(9,089	)
Other, net		1,077			(5,204	)		(6,880	)

Provision for income taxes	$	89,343		$	86,041		$	88,352

The Company’s effective tax rates were 14.6%, 12.7% and 13.0% for the years ended December 31, 2020, 2019 and 2018, respectively.

The Company’s effective income tax rate differs from the U.S. federal statutory rate each year due to differences in the proportionate amounts of

pre-tax

income recognized in jurisdictions with different effective tax rates and the items discussed below.

The four p

incipal jurisdictions in which the Company manufactures are the U.S., Ireland, the U.K. and Singapore, where the statutory tax rates were 21%, 12.5%, 19% and 17%, respectively, as of December 31, 2020. The Company has received a tax exemption on income arising from qualifying activities in Singapore through March 2021, based upon the achievement of certain contractual milestones, which the Company met as of December 31, 2020 and expects to maintain through March 2021. The effect of applying the 0% concessionary income tax rate rather than the statutory tax rate to income arising from qualifying activities in Singapore increased the Company’s net income during the years ended December 31, 2020, 2019 and 2018 by $21 million, $24 million and $28 million, respectively, and increased the Company’s net income per diluted share by $0.33, $0.35 and $0.36, respectively. In addition, the Company has a new Development and Expansion Incentive in Singapore that provides a concessionary income tax rate of 5% on certain types of income for the period April 1, 2021 through March 31, 2026.

During 2020, the Company’s effective tax rate differed from the 21% U.S. statutory tax rate primarily due to the jurisdictional mix of earnings, a $13 million provision related to the GILTI tax and a tax benefit of $7 million on stock-based compensation.

The 2019 effective tax rate differed from the U.S. federal statutory tax rate primarily due to the jurisdictional mix of earnings, an $11 million provision related to the GILTI tax and a tax benefit of $9 million on stock-based compensation.

The 2018 effective tax rate differed from the U.S. federal statutory tax rate primarily due to the jurisdictional mix of earnings, a $14 million provision related to the GILTI tax, an $8 million provision for a change in foreign currency exchange rates related to the transition tax, a $9 million benefit related to stock-based compensation and a $6 million net benefit related to the finalization of the impact of the Tax Cuts and Jobs Act (the “2017 Act”).

At the end of 2018, and as a result of the enactment of the 2017 Act, we reevaluated our historic assertion and no longer considered undistributed earnings from foreign subsidiaries to be indefinitely reinvested. The

Company recorded a tax provision of $3 million, $3 million and $4 million for 2020, 2019 and 2018, respectively, for future withholding taxes and U.S. state taxes on the repatriation of 2020, 2019 and 2018 undistributed earnings.

The tax effects of temporary differences and carryforwards which give rise to deferred tax assets and deferred tax liabilities are summarized as follows (in thousands):


	December 31,
	2020			2019
Deferred tax assets:
Net operating losses and credits	$	61,962		$	55,939
Depreciation		5,701			4,776
Operating leases		24,317			19,849
Amortization		2,377			3,738
Stock-based compensation		7,773			9,790
Deferred compensation		27,754			20,077
Unrealized foreign currency gain/loss		—			7,955
Deferred revenue		11,341			9,696
Revaluation of equity investments and licenses		4,492			3,424
Inventory		5,060			4,824
Accrued liabilities and reserves		10,639			7,215
Other		3,483			3,839

Total deferred tax assets		164,899			151,122
Valuation allowance		(60,101	)		(51,221	)

Deferred tax assets, net of valuation allowance		104,798			99,901
Deferred tax liabilities:
Capitalized software		(23,748	)		(21,025	)
Operating leases		(24,314	)		(19,553	)
Indefinite-lived intangibles		(14,973	)		(14,363	)
Unrealized foreign currency gain/loss		(10,819	)		—
Deferred tax liability on foreign earnings		(17,277	)		(18,027	)

Total deferred tax liabilities		(91,131	)		(72,968	)

Net deferred tax assets	$	13,667		$	26,933

The Company has gross foreign net operating losses of $249 million, of which $230 million do not expire under current laws and $19 million start expiring in 2021. As of December 31, 2020, the Company has provided a deferred tax valuation allowance of $60 million, of which $55 million relates to certain foreign net operating losses. The Company’s net deferred tax assets associated with net operating losses and tax credit carryforwards are approximately $7 million as of December 31, 2020, which represent the future tax benefit of foreign net operating loss carryforwards that do not expire under current law.

The Company accounts for its uncertain tax return positions in accordance with the accounting standards for income taxes, which require financial statement reporting of the expected future tax consequences of uncertain tax reporting positions on the presumption that all concerned tax authorities possess full knowledge of those tax reporting positions, as well as all of the pertinent facts and circumstances, but prohibit any discounting of unrecognized tax benefits associated with those reporting positions for the time value of money. The Company continues to classify interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes.

The following is a summary of the activity of the Company’s gross unrecognized tax benefits, excluding interest and penalties, for the year ended December 31, 2020, 2019 and 2018 (in thousands):


	2020			2019			2018
Balance at the beginning of the period	$	27,790		$	26,108		$	5,843
Net reductions for settlement of tax audits		(399	)		—			—
Net reductions for lapse of statutes taken during the period		(684	)		(261	)		(436	)
Net additions for tax positions taken during the prior period		—			—			17,651
Net additions for tax positions taken during the current period		1,959			1,943			3,050

Balance at the end of the period	$	28,666		$	27,790		$	26,108

As of 2020, the total amount of gross unrecognized tax benefits was $29 million, all of which, if recognized, would impact the Company’s effective tax rate.

With limited exceptions, the Company is no longer subject to tax audit examinations in significant jurisdictions for the years ended on or before December 31, 2015. The Company continuously monitors the lapsing of statutes of limitations on potential tax assessments for related changes in the measurement of unrecognized tax benefits, related net interest and penalties and deferred tax assets and liabilities.

As of December 31, 2020, the Company expects to record additional reductions in the measurement of its unrecognized tax benefits and related net interest and penalties of approximately $1 million within the next twelve months due to potential tax audit settlements and the lapsing of statutes of limitations on potential tax assessments. The Company does not expect to record any other material reductions in the measurement of its unrecognized tax benefits within the next twelve months.

As of December 31, 2020, the Company is currently under an income tax audit in the U.S. for its 2017 and 2018 tax years. The Company is also subject to various foreign audits and inquiries and we currently do not expect any material adjustments.

The following is a summary of the activity of the Company’s valuation allowance for the years ended December 31, 2020, 2019 and 2018 (in thousands):


	Balance at Beginning of Period		Charged to Provision for Income Taxes*			Other**			Balance at End of Period
Valuation allowance for deferred tax assets:
2020	$	51,221	$	1,137		$	7,743		$	60,101
2019	$	53,893	$	(1,242	)	$	(1,430	)	$	51,221
2018	$	62,098	$	(2,128	)	$	(6,077	)	$	53,893

*	These amounts have been recorded as part of the income statement provision for income taxes. The income statement effects of these amounts have largely been offset by amounts related to changes in other deferred tax balance sheet accounts.

The change in the valuation allowance during the year ended December 31, 2020 is primarily due to the effect of foreign currency translation on a valuation allowance related to a net operating loss carryforward and acquired historical net operating losses. The change in the valuation allowance during the year ended December 31, 2019 was primarily due to the effect of foreign currency translation on a valuation allowance related to a net operating loss carryforward. The change in the valuation allowance during the year ended December 31, 2018 was primarily due to the

write-off

of a valuation allowance to Retained Earnings for the tax effect related to intra-entity transfers.

In March 2020, the U.S. federal government enacted the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The CARES Act is an emergency economic stimulus package in response to the

COVID-19

outbreak which, among other things, contains numerous income tax provisions. The CARES Act does not have a material impact on the Company’s consolidated financial statements or related disclosures.