Income tax data for the years ended December 31, 2022, 2021 and 2020 is as follows (in

thousands):


	Year Ended December 31,
	2022		2021		2020
The components of income before income taxes are as follows:
Domestic	$	133,816	$	144,410	$	75,193
Foreign		704,030		661,783		535,721

Total	$	837,846	$	806,193	$	610,914


	Year Ended December 31,
	2022			2021		2020
The components of the income tax provision were as follows:
Federal	$	62,153		$	16,302	$	28,385
State		8,025			3,691		4,243
Foreign		91,901			76,724		59,408

Total current tax provision	$	162,079		$	96,717	$	92,036

Federal	$	(26,551	)	$	10,491	$	(8,244	)
State		(4,420	)		345		(506	)
Foreign		(1,017	)		5,797		6,057

Total deferred tax provision		(31,988	)		16,633		(2,693	)

Total provision	$	130,091		$	113,350	$	89,343

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, 2022, 2021 and 2020 (in

thousands):


	Year Ended December 31,
	2022			2021			2020
Federal tax computed at U.S. statutory income tax rate	$	175,948		$	169,300		$	128,292
GILTI, net of foreign tax credits		17,812			10,476			13,319
State income tax, net of federal income tax benefit		3,605			4,036			2,415
Net effect of foreign operations		(54,549	)		(54,566	)		(48,962	)
Effect of stock-based compensation		(7,341	)		(6,682	)		(6,798	)
Other, net		(5,384	)		(9,214	)		1,077

Provision for income taxes	$	130,091		$	113,350		$	89,343

The

Company’s effective tax rate w

15.5

14.1

% and

14.6

% for the years ended December 31, 2022, 2021 and 2020, 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 principal 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, 2022. 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. Prior to

April 1, 2021, the Company had a tax exemption on income arising from qualifying activities in Singapore based upon the achievement of certain contractual milestones, which the Company met as of December 31, 2020 and maintained through March 2021. The effect of applying these concessionary income tax rates rather than the statutory tax rate to income arising from qualifying activities in Singapore increased the Company’s net income

by $20 million, $20 million and $21 million and increased the Company’s net income per diluted share by $0.33, $0.32 and $0.33

for the years ended December 31, 2022, 2021 and 2020, respectively.

During 2022, the Company’s effective tax rate differed from the 21% U.S. statutory tax rate primarily due to the jurisdictional mix of earnings, a

$18 million provision related to the

GILTI tax, including the

impact of capitalizing research and

development expenditures pursuant to IRC Section 174, and a tax benefit of $

7 million on stock-based compensation.

The 2021 effective tax rate differed from the

% U.S. statutory tax rate primarily due to the jurisdictional mix of earnings, a $

million provision related to the GILTI tax and a tax benefit of $

million on stock-based compensation.

The 2020 effective tax rate differed from the 21% U.S. statutory tax rate primarily

due to the jurisdictional mix of earnings, an $

million provision related to the GILTI tax and a tax benefit of $

million on stock-based compensation.

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 $

million, $

million and $

million for 202

, 202

and 20

, respectively, for future withholding taxes and U.S. state taxes on the repatriation of 202

, 202

and 20

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,
	2022			2021
Deferred tax assets:
Net operating losses and credits	$	51,945		$	55,813
Depreciation		18			—
Operating leases		19,771			19,288
Amortization		2,713			2,316
Stock-based compensation		7,947			8,074
Deferred compensation		23,488			30,105
Deferred revenue		13,555			10,997
Revaluation of equity investments and licenses		23			3,083
Inventory		6,463			5,405
Accrued liabilities and reserves		4,815			6,675
Unrealized foreign currency gain/loss		1,858			2,266
Capitalized Section 174 Expenditures		34,234			—
Other		1,098			6,713

Total deferred tax assets		167,928			150,735
Valuation allowance		(54,300	)		(58,834	)

Deferred tax assets, net of valuation allowance		113,628			91,901
Deferred tax liabilities:
Capitalized software		(25,429	)		(24,357	)
Operating leases		(19,543	)		(19,251	)
Indefinite-lived intangibles		(16,057	)		(15,534	)
Depreciation		—			(3,481	)
Deferred tax liability on foreign earnings		(18,677	)		(17,283	)

Total deferred tax liabilities		(79,706	)		(79,906	)

Net deferred tax assets	$	33,922		$	11,995

The Company has gross foreign net operating losses of $214 million, of which $188 million do not expire under current laws and $26

million start expiring in 2023. As of December 31, 2022, the Company has provided a

deferred tax valuation allowance of $

54 million, of which $49

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

million as of December 31, 2022, 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.


	2022			2021			2020
Balance at the beginning of the period	$	28,692		$	28,666		$	27,790
Net reductions for settlement of tax audits		—			(1,300	)		(399	)
Net reductions for lapse of statutes taken during the period		(818	)		(433	)		(684	)
Net additions for tax positions taken during the current period		1,145			1,759			1,959

Balance at the end of the period	$	29,019		$	28,692		$	28,666

As of 2022, 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, 2017. 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, 2022, the Company expects to record additional reductions in the measurement of its unrecognized tax benefits and related net interest and penalties of approximately $

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, 2022, 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, 2022, 2021 and 2020 (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:
2022	$	58,834	$	(1,647	)	$	(2,887	)	$	54,300
2021	$	60,101	$	2,919		$	(4,186	)	$	58,834
2020	$	51,221	$	1,137		$	7,743		$	60,101

*	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 changes in the valuation allowance during the years ended December 31, 2022 and 2021 are 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, 2020 was 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.

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.