XML 30 R19.htm IDEA: XBRL DOCUMENT v3.24.1.1.u2
Income Taxes
 3 Months Ended
May 04, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
In 2021, the Organization for Economic Co-operation and Development announced an Inclusive Framework on Base Erosion and Profit Shifting including Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large multinational corporations at a minimum rate of 15%. Subsequently multiple sets of administrative guidance have been issued. Many non-US tax jurisdictions have either recently enacted legislation to adopt certain components of the Pillar Two Model Rules beginning in 2024 with the adoption of additional components in later years or announced their plans to enact legislation in future years. Considering we do not have material operations in jurisdictions with tax rates lower than the Pillar Two minimum, these rules did not have a material impact on our financial statements for the first quarter of fiscal 2025 and are not expected to materially increase our global tax costs on our fiscal 2025 financial statements. There remains uncertainty as to the final Pillar Two model rules. We are continuing to evaluate the impacts of enacted legislation and pending legislation to enact Pillar Two Model Rules in the non-US tax jurisdictions we operate in.
The effective income tax rate was 23.0% for the first quarter of fiscal 2025 and 26.2% for the first quarter of fiscal 2024. The decrease in the effective income tax rate in the first quarter of fiscal 2025 was primarily due to the resolution of various tax matters and the increase in excess tax benefit from share-based compensation.
TJX had net unrecognized tax benefits of $200 million as of May 4, 2024, $228 million as of February 3, 2024 and $266 million as of April 29, 2023.
TJX is subject to U.S. federal income tax as well as income tax in multiple state, local and foreign jurisdictions. In the U.S. and India, fiscal years through 2010 are no longer subject to examination. In all other jurisdictions, fiscal years through 2011 are no longer subject to examination.
TJX’s accounting policy is to classify interest and penalties related to income tax matters as part of income tax expense. The accrued amounts for interest and penalties on the Consolidated Balance Sheets were $24 million as of May 4, 2024, $32 million as of February 3, 2024 and $40 million as of April 29, 2023.
Based on the final resolution of tax examinations, judicial or administrative proceedings, changes in facts or law, expirations of statutes of limitations in specific jurisdictions or other resolutions of, or changes in, tax positions, it is reasonably possible that unrecognized tax benefits for certain tax positions taken on previously filed tax returns may change materially from those represented on the Consolidated Financial Statements as of May 4, 2024. During the next twelve months, it is reasonably possible that tax audit resolutions may reduce unrecognized tax benefits by up to $24 million, which would reduce the provision for taxes on earnings.