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Taxes on Income | 12 Months Ended
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Dec. 31, 2019
Taxes on Income |
Taxes on Income | 16. Taxes on Income ​ The amount of earnings (loss) before income taxes is: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Years Ended December 31, | ​
($ in millions) |  | 2019 |  | 2018 |  | 2017 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
U.S. | ​ | $ | 224 | ​ | $ | 193 | ​ | $ | 147 | ​
Foreign | ​ | ​ | 384 | ​ | ​ | 440 | ​ | ​ | 367 | ​
​ | ​ | $ | 608 | ​ | $ | 633 | ​ | $ | 514 | ​
​ The provision (benefit) for income tax expense is: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Years Ended December 31, | ​
($ in millions) |  | 2019 |  | 2018 |  | 2017 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Current | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
U.S. | ​ | $ | (1) | ​ | $ | 30 | ​ | $ | 6 | ​
State and local | ​ | ​ | 7 | ​ | ​ | 5 | ​ | ​ | — | ​
Foreign | ​ | ​ | 110 | ​ | ​ | 115 | ​ | ​ | 77 | ​
Total current | ​ | ​ | 116 | ​ | ​ | 150 | ​ | ​ | 83 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Deferred | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
U.S. | ​ | ​ | (26) | ​ | ​ | 21 | ​ | ​ | 92 | ​
State and local | ​ | ​ | (1) | ​ | ​ | 9 | ​ | ​ | 7 | ​
Foreign | ​ | ​ | (18) | ​ | ​ | 5 | ​ | ​ | (17) | ​
Total deferred | ​ | ​ | (45) | ​ | ​ | 35 | ​ | ​ | 82 | ​
Tax provision (benefit) | ​ | $ | 71 | ​ | $ | 185 | ​ | $ | 165 | ​
​ The income tax provision recorded within the consolidated statements of earnings differs from the provision determined by applying the U.S. statutory tax rate to pretax earnings as a result of the following: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Years Ended December 31, | ​
($ in millions) |  | 2019 |  | 2018 |  | 2017 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Statutory U.S. federal income tax | ​ | $ | 128 | ​ | $ | 133 | ​ | $ | 180 | ​
Increase (decrease) due to: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Foreign tax rate differences including tax holidays | ​ | ​ | (11) | ​ | ​ | (11) | ​ | ​ | (52) | ​
Foreign tax law and rate changes | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (28) | ​
U.S. tax reform (a) | ​ | ​ | — | ​ | ​ | (45) | ​ | ​ | 83 | ​
Foreign exchange loss on revaluation of Brazilian deferred tax balances | ​ | ​ | 4 | ​ | ​ | 26 | ​ | ​ | — | ​
Global intangible low-taxed income (GILTI) | ​ | ​ | 12 | ​ | ​ | 15 | ​ | ​ | — | ​
Permanent differences on business dispositions | ​ | ​ | (3) | ​ | ​ | 56 | ​ | ​ | 18 | ​
U.S. state and local taxes, net | ​ | ​ | 4 | ​ | ​ | 13 | ​ | ​ | 3 | ​
U.S. taxes on foreign earnings, net of tax deductions and credits | ​ | ​ | (6) | ​ | ​ | (9) | ​ | ​ | (6) | ​
U.S. manufacturing deduction | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (8) | ​
U.S. research and development tax credits | ​ | ​ | (10) | ​ | ​ | (7) | ​ | ​ | (9) | ​
Uncertain tax positions, including interest | ​ | ​ | (19) | ​ | ​ | (1) | ​ | ​ | (3) | ​
Change in valuation allowances | ​ | ​ | 24 | ​ | ​ | 31 | ​ | ​ | 15 | ​
Equity compensation related impacts | ​ | ​ | (43) | ​ | ​ | (14) | ​ | ​ | (16) | ​
Other, net | ​ | ​ | (9) | ​ | ​ | (2) | ​ | ​ | (12) | ​
Provision (benefit) for taxes | ​ | $ | 71 | ​ | $ | 185 | ​ | $ | 165 | ​
Effective tax rate expressed as a percentage of pretax earnings | ​ | ​ | 11.7 | % | ​ | 29.2 | % | ​ | 32.1 | %
(a) | Includes 2018 adjustments required to record the final impact of the implications of the U.S. Tax Cuts and Jobs Act signed into law in 2017.
​ On December 22, 2017, the U.S. Tax Cuts and Jobs Act (the Act) was signed into law. The Act significantly changed U.S. income tax law by, among other things, reducing the U.S. federal income tax rate from 35 percent to 21 percent, transitioning from a global tax system to a modified territorial tax system, eliminating the domestic manufacturing deduction, providing for immediate expensing of certain qualified capital expenditures and limiting the tax deductions for interest expense and executive compensation. During 2017, tax expense was increased by provisional amounts of $52 million and $31 million related to the revaluing of the net deferred tax asset position in the U.S. and the transition tax, respectively. During 2018, tax expense was decreased by $45 million for the required final adjustments related to the Act. Tax expense for 2019 was increased by $12 million related to the tax on GILTI which was enacted as part of the Act in 2017. Any additional changes as part of the Act had an immaterial impact on tax expense during 2019. ​ The company generally intends to limit distributions from non-U.S. subsidiaries to earnings previously taxed in the U.S., primarily as a result of the transition tax or tax on GILTI incurred pursuant to the Act. As of December 31, 2019, the company has $2.1 billion of retained earnings in non-U.S. subsidiaries. Of these undistributed earnings, $655 million were previously subjected to U.S. federal income tax. The company has accrued approximately $44 million for estimated foreign withholding taxes on portions of the foreign earnings that are not indefinitely reinvested. The company has not provided deferred taxes on any other outside basis differences in our investments in other non-U.S. subsidiaries as these other outside basis differences are indefinitely reinvested. A determination of the unrecognized deferred taxes related to any of these other outside basis differences is not practicable. ​ Ball’s Serbian subsidiary was granted tax relief equal to 80 percent of local investments over a ten-year period that will expire in 2022. The tax relief may be used to offset tax on earnings and has $6 million remaining as of December 31, 2019. Ball’s Polish subsidiary was granted a tax holiday in 2014 based on new capital investment. The holiday provides up to $34 million of tax relief over a ten-year period of which $28 million remained as of December 31, 2019. Several of Ball’s Brazilian subsidiaries benefit from various tax holidays with expiration dates ranging from 2020 to 2030. These tax holidays reduced income tax by $62 million or $0.19 per share, $63 million or $0.18 per share and $47 million or $0.13 per share for 2019, 2018 and 2017, respectively. ​ Net income tax payments were $128 million, $143 million and $107 million in 2019, 2018 and 2017, respectively. ​ The significant components of deferred tax assets and liabilities are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31,
($ in millions) |  | 2019 |  | 2018
​ | ​ | ​ | ​ | ​ | ​ | ​
Deferred tax assets: | ​ | ​ | ​ | ​ | ​ | ​
Deferred compensation | ​ | $ | 90 | ​ | $ | 73
Accrued employee benefits | ​ | ​ | 93 | ​ | ​ | 100
Accrued pensions | ​ | ​ | 190 | ​ | ​ | 179
Inventory and other reserves | ​ | ​ | 42 | ​ | ​ | 41
Net operating losses, foreign tax credits and other tax attributes | ​ | ​ | 408 | ​ | ​ | 390
Unrealized losses on currency exchange and derivative transactions | ​ | ​ | 6 | ​ | ​ | 26
Goodwill and other intangible assets | ​ | ​ | 54 | ​ | ​ | 64
Other | ​ | ​ | 168 | ​ | ​ | 110
Total deferred tax assets | ​ | ​ | 1,051 | ​ | ​ | 983
Valuation allowance | ​ | ​ | (244) | ​ | ​ | (224)
Net deferred tax assets | ​ | ​ | 807 | ​ | ​ | 759
Deferred tax liabilities: | ​ | ​ | ​ | ​ | ​ | ​
Property, plant and equipment | ​ | ​ | (330) | ​ | ​ | (336)
Goodwill and other intangible assets | ​ | ​ | (586) | ​ | ​ | (621)
Pension assets | ​ | ​ | (74) | ​ | ​ | (90)
Other | ​ | ​ | (137) | ​ | ​ | (120)
Total deferred tax liabilities | ​ | ​ | (1,127) | ​ | ​ | (1,167)
Net deferred tax asset (liability) | ​ | $ | (320) | ​ | $ | (408)
​ | ​ | ​ | ​ | ​ | ​ | ​
​ The net deferred tax asset (liability) was included in the consolidated balance sheets as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31,
($ in millions) |  | 2019 |  | 2018
​ | ​ | ​ | ​ | ​ | ​ | ​
Other assets | ​ | $ | 241 | ​ | $ | 237
Deferred taxes | ​ | ​ | (561) | ​ | ​ | (645)
Net deferred tax asset (liability) | ​ | $ | (320) | ​ | $ | (408)
​ | ​ | ​ | ​ | ​ | ​ | ​
At December 31, 2019, Ball has recorded deferred tax assets related to federal and foreign net operating and capital loss carryforwards of $246 million, U.S. foreign tax and research and development tax credit carryforwards of $107 million and state net operating loss carryforwards of $55 million. These attributes are spread across the regions in which the company operates, including Europe, North and Central America, Asia and South America, and generally have expiration periods beginning in 2020 to indefinite, with the largest portion carried forward indefinitely. Each has been assessed for realization as of December 31, 2019. ​ In 2019, the company’s overall valuation allowances increased by a net $20 million. The increase to the valuation allowance was primarily due to nondeductible U.K. interest expense and operating losses incurred primarily in various U.S. state and foreign jurisdictions, none of which are expected to be utilized in future periods. This increase was partially offset by a reduction due to the disposition of certain Asian subsidiaries. Ball’s 2019 effective tax rate was impacted by $24 million of the net change in the valuation allowance. ​ In 2018, the company’s overall valuation allowances increased by a net $59 million. The increase to the valuation allowance was primarily due to nondeductible U.K. interest expense and operating losses incurred primarily in various foreign jurisdictions, neither of which are expected to be utilized in future periods. Ball’s 2018 effective tax rate was impacted by $31 million of the net change in the valuation allowance. ​ In 2017, the company’s overall valuation allowances decreased by a net $18 million. Decreases to the valuation allowance were primarily due to the release of the company’s $46 million valuation allowance on its foreign tax credit carryforwards that will be realized against a portion of the transition tax incurred as a result of the Act and a net decrease of $6 million related to the law change in the U.K., including valuation allowances established against nondeductible interest expense. These items all had an impact on Ball’s effective rate and are included as components of U.S. tax reform, foreign tax law changes and foreign tax rate differences in the rate reconciliation. This net decrease was offset by increases for recording additional valuation allowances of $19 million related to the 2016 acquisition of Rexam and for unusable 2017 losses of $15 million incurred in various jurisdictions. The increase in unusable losses had a tax rate impact which is reflected in the valuation allowance line of the rate reconciliation. ​ A roll forward of the company’s unrecognized tax benefits, as included in other noncurrent liabilities, related to uncertain income tax positions at December 31 follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
($ in millions) |  | 2019 |  | 2018 |  | 2017
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Balance at January 1 | ​ | $ | 80 | ​ | $ | 84 | ​ | $ | 77
Additions based on tax positions related to the current year | ​ | ​ | — | ​ | ​ | 14 | ​ | ​ | 18
Additions for tax positions of prior years | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 1
Reductions for tax positions from prior years | ​ | ​ | — | ​ | ​ | (4) | ​ | ​ | —
Reductions for settlements | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (7)
Reductions due to lapse of statute of limitations | ​ | ​ | (16) | ​ | ​ | (10) | ​ | ​ | (12)
Effect of foreign currency exchange rates | ​ | ​ | (1) | ​ | ​ | (4) | ​ | ​ | 7
Balance at December 31 | ​ | $ | 63 | ​ | $ | 80 | ​ | $ | 84
​ The annual provisions for income taxes included a tax benefit related to uncertain tax positions, including interest and penalties, of $19 million in 2019, $1 million in 2018 and $3 million in 2017. ​ At December 31, 2019, the amounts of unrecognized tax benefits that, if recognized, would reduce tax expense were $74 million, inclusive of interest, penalties and the federal impact of U.S. state items. The company and its subsidiaries file income tax returns in the U.S. federal, various state, local and foreign jurisdictions. The U.S. federal statute of limitations is closed for years prior to 2014. With a few exceptions, the company is no longer subject to examination by state and local tax authorities for years prior to 2014. The company’s significant non-U.S. filings are in Germany, France, the U.K., Spain, the Netherlands, Poland, Serbia, Switzerland, Sweden, Russia, Turkey, Egypt, Saudi Arabia, Canada, Brazil, the Czech Republic, Mexico, Chile and Argentina. The company’s foreign statutes of limitations are generally open for years after 2013. At December 31, 2019, the company is either under examination or has been notified of a pending examination by tax authorities in the U.S., Germany, the U.K., the Netherlands, France, Ireland, Hong Kong, Saudi Arabia, India, Egypt, Brazil and various U.S. states. ​ Due primarily to potential expiration of certain statutes of limitations, it is reasonably possible that a decrease in the range of $13 million to $19 million in the total amount of unrecognized tax benefits may occur within the coming year, all of which would reduce income tax expense. ​ The company recognizes the accrual of interest and penalties related to unrecognized tax benefits in income tax expense. Ball recognized $3 million of tax benefit, $1 million of tax benefit and $4 million of tax benefit in 2019, 2018 and 2017, respectively, for potential interest on these items. At December 31, 2019, 2018 and 2017, the accrual for uncertain tax positions included potential interest expense of $6 million, $6 million and $7 million, respectively. The company has accrued penalties of $6 million in 2019, $9 million in 2018 and $10 million in 2017.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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