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Income Taxes
 6 Months Ended
Jun. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The effective income tax rates were 23.2% and 18.7% for the three months ended June 30, 2023 and 2022, respectively. The higher effective income tax rate for the three months ended June 30, 2023, versus the comparable period in 2022, was primarily due to a $212 million discrete tax expense to establish a valuation allowance associated with the U.S. foreign tax credit carryforward deferred tax asset resulting from foreign tax legislation enacted in Brazil in the current period. The U.K. statutory tax rate increase, effective in 2023, also contributed to the higher effective income tax rate for the current period.
The effective income tax rates were 20.6% and 11.9% for the six months ended June 30, 2023 and 2022, respectively. The higher effective income tax rate for the six months ended June 30, 2023, versus the comparable period in 2022, was primarily due to changes in the valuation allowance associated with the U.S. foreign tax credit carryforward deferred tax asset. In 2022, the Company recognized a discrete tax benefit related to final U.S. tax regulations published in the first quarter of 2022 (the “2022 Regulations”), which resulted in a valuation allowance release of $333 million. In the second quarter of 2023, foreign tax legislation was enacted in Brazil which changed the treatment of foreign taxes paid under the 2022 Regulations. Therefore, the Company recognized a $212 million discrete tax expense in 2023 to establish the valuation allowance on the remaining U.S. foreign tax credit carryforward deferred tax asset. The foreign tax legislation allows the Company the ability to generate additional foreign tax credits going forward. The U.K. statutory tax rate increase, effective in 2023, also contributed to the higher effective income tax rate in 2023.
On July 21, 2023, the U.S. Department of Treasury released Notice 2023-55 (the “Notice”), providing taxpayers relief from certain aspects of the 2022 Regulations for 2022 and 2023. The Company is evaluating the impacts of the Notice to its effective tax rate, as well as deferred tax assets and corresponding valuation allowance.
The Company is subject to tax in the United States, Belgium, Singapore, the United Kingdom and various other foreign jurisdictions, as well as state and local jurisdictions. Uncertain tax positions are reviewed on an ongoing basis and are adjusted after considering facts and circumstances, including progress of tax audits, developments in case law and closing of statutes of limitation. Within the next twelve months, the Company believes that the resolution of certain federal, foreign and state and local examinations is reasonably possible and that a change in estimate, reducing unrecognized tax benefits, may occur. While such a change may be significant, it is not possible to provide a range of the potential change until the examinations progress further or the related statutes of limitation expire. The Company has effectively settled its U.S. federal income tax obligations through 2014. With limited exception, the Company is no longer subject to state and local or foreign examinations by tax authorities for years before 2011.