Note 10 — Income Taxes

The provision (benefit) for income taxes consists of the following:


	Year Ended September 30,
	2016			2015			2014
Current	$	77,682		$	94,128		$	73,938
Deferred		(2,315	)		(26,887	)		(6,510	)

	$	75,367		$	67,241		$	67,428

All income taxes are from continuing operations reported by the Company in the applicable taxing jurisdiction. Income taxes also include anticipated withholding taxes due on subsidiaries’ earnings when paid as dividends to the Company.

During fiscal years 2016, 2015 and 2014, the Company recognized immaterial deferred income tax expense as a result of enacted changes in tax laws or rates.

Deferred income taxes are comprised of the following components:


	As of September 30,
	2016			2015
Deferred tax assets:
Deferred revenue	$	57,361		$	69,680
Employee compensation and benefits		80,312			75,401
Intangible assets, computer software and intellectual property		14,840			14,937
Tax credits, net capital and operating loss carryforwards		168,641			114,709
Other		68,073			68,300

Total deferred tax assets		389,227			343,027
Valuation allowances		(96,870	)		(112,165	)

Total deferred tax assets, net		292,357			230,862

Deferred tax liabilities:
Anticipated withholdings on subsidiaries’ earnings		(66,628	)		(58,774	)
Intangible assets, computer software and intellectual property		(146,848	)		(118,650	)
Other		(26,228	)		(19,886	)

Total deferred tax liabilities		(239,704	)		(197,310	)

Net deferred tax assets	$	52,653		$	33,552

The effective income tax rate varied from the statutory Guernsey tax rate as follows:


	Year Ended September 30,
	2016			2015			2014
Statutory Guernsey tax rate		0	%		0	%		0	%
Foreign taxes(1)		16			13			14

Effective income tax rate		16	%		13	%		14	%

(1)

In fiscal year 2016, foreign taxes included a net benefit of $15,264 due to settlements and conclusions of tax audits in certain jurisdictions that resulted in a reduction to the Company’s provision for gross unrecognized tax benefits, partially offset by a decrease to the Company’s taxes receivable and deferred tax assets. Foreign taxes in fiscal year 2016 also included a decrease of $4,606 that was attributable to the expiration of statutes of limitations related to unrecognized tax benefits accumulated over several years in certain jurisdictions, which was partially offset by provisions for new uncertain tax positions of $23,597 recognized during fiscal year 2016. In addition, foreign taxes in fiscal year 2016 included a benefit of $19,963 as a result of a release of tax provision in light of a non-taxable internal capital gain recognized during fiscal year 2016. Foreign taxes in fiscal year 2016 included also a benefit of $15,651 resulting from the release of valuation allowances on deferred tax assets at several of the Company’s subsidiaries, which will, more likely than not, be realized due to the Company’s projections of future taxable income.

In fiscal year 2015, foreign taxes included a net benefit of $7,594 due to settlements of tax audits in certain jurisdictions that resulted in a reduction to the Company’s provision for gross unrecognized tax benefits, partially offset by an increase to the Company’s taxes payable. Foreign taxes in fiscal year 2015 also included a decrease of $17,232 that was attributable to the expiration of statutes of limitations related to unrecognized tax benefits accumulated over several years in certain jurisdictions, which was partially offset by a provision for a new uncertain tax position of $6,000 recognized during fiscal year 2015. In addition, foreign taxes in fiscal year 2015 included a net benefit of $22,895 resulting from the release of valuation allowances on deferred tax assets at several of the Company’s subsidiaries, which will, more likely than not, be realized due to the Company’s projections of future taxable income.

As a Guernsey company subject to a corporate tax rate of zero percent, the Company’s overall effective tax rate is attributable to foreign taxes. The Company’s income before income tax expense is considered to be foreign income.

During fiscal year 2016, the net decrease in valuation allowances was $15,295, which related to the uncertainty of realizing tax benefits primarily for tax credits, net capital and operating loss carryforwards related to certain of the Company’s subsidiaries. As of September 30, 2016, the Company had tax credits, net capital and operating loss carryforwards of $773,721, of which $214,538 have expiration dates through 2036, and the remainder do not expire.

During fiscal year 2015, the net decrease in valuation allowances was $16,042, which related to the uncertainty of realizing tax benefits primarily for tax credits, net capital and operating loss carryforwards related to certain of the Company’s subsidiaries. As of September 30, 2015, the Company had tax credits, net capital and operating loss carryforwards of $451,247, of which $98,912 have expiration dates through 2035, and the remainder do not expire.

The aggregate changes in the balance of the Company’s gross unrecognized tax benefits were as follows:


	Year Ended September 30,
	2016			2015			2014
Balance at beginning of fiscal year	$	126,706		$	123,942		$	130,371
Additions based on tax positions related to the current year		65,009			22,314			22,821
Additions for tax positions of prior years		41,183			11,125			4,016
Reductions for tax positions of prior years		—			—			—
Settlements with tax authorities		(31,624	)		(13,443	)		(14,557	)
Lapse of statute of limitations		(4,606	)		(17,232	)		(18,709	)

Balance at end of fiscal year	$	196,668		$	126,706		$	123,942

The total amount of unrecognized tax benefits, which includes interest and penalties, was $196,668 as of September 30, 2016, and $126,706 as of September 30, 2015, all of which would affect the effective tax rate if realized.

The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes. As of September 30, 2016, the Company had accrued $31,138 in income taxes payable for interest and penalties relating to unrecognized tax benefits, of which $8,919 was recognized in the statements of income in fiscal year 2016. As of September 30, 2015, the Company had accrued $22,219 in income taxes payable for interest and penalties relating to unrecognized tax benefits, of which $1,364 was recognized in the statements of income in fiscal year 2015.

The Company is currently under audit in several jurisdictions for the tax years 2007 and onwards. Timing of the resolution of audits is highly uncertain and therefore, as of September 30, 2016, the Company cannot estimate the change in unrecognized tax benefits resulting from these audits within the next 12 months.

It is reasonably possible that the amount of unrecognized tax benefits may decrease by $28,066 during fiscal 2017 as a result of lapse of statutes of limitations in jurisdictions in which the Company operates.