XML 37 R26.htm IDEA: XBRL DOCUMENT v3.25.3
Income Taxes
 9 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
For the three months ended September 30, 2025, we recorded a tax provision of $82.2 million on a pretax loss of $466.0 million, resulting in a negative 17.6 percent effective tax rate from continuing operations. For the nine months ended September 30, 2025, we recorded a tax provision of $110.1 million on a pretax loss of $402.3 million, resulting in a negative 27.4 percent effective tax rate from continuing operations. The tax provision for the three and nine months ended September 30, 2025 was primarily driven by pretax charges recorded without a tax benefit related to the sale of our India business, discussed in Note 1, as well as the unfavorable impact of legislative changes of the One Big Beautiful Bill Act (“the Act”), discussed further below. For the three months ended September 30, 2024, a tax provision of $6.0 million was recorded on pretax income of $72.5 million resulting in an 8.3 percent effective tax rate from continuing operations. For the nine months ended September 30, 2024, we recorded a tax benefit of $298.9 million on pretax income of $75.0 million resulting in a negative 398.5 percent effective tax rate from continuing operations. In the second quarter of 2024, we recorded a tax benefit of approximately $300 million in connection with the establishment of a global technology and innovation center in Switzerland. Refer to Note 11 to the consolidated financial statements included within our 2024 Form 10-K for more information. Outside of these items, the change in the effective tax rate was impacted by foreign currency as well as the global mix of earnings.
We determine our interim tax provision using an Estimated Annual Effective Tax Rate methodology ("EAETR") in accordance with U.S. GAAP. The EAETR is applied to the year-to-date ordinary income, exclusive of discrete items. The tax effects of discrete items are then included to arrive at the total reported interim tax provision. The determination of the EAETR is based upon a number of estimates, including the estimated annual pretax ordinary income in each tax jurisdiction in which we operate. As our projections of ordinary income change throughout the year, the EAETR will change period-to-period. A significant amount of our earnings is generated by our foreign subsidiaries, which tax earnings at lower statutory rates than the United States federal statutory rate. Our future effective tax rates may be materially impacted by a future change in the composition of earnings from foreign and domestic tax jurisdictions. The tax effects of discrete items are recognized in the tax provision in the period they occur in accordance with U.S. GAAP. Depending on various factors, such as the item’s significance in relation to total income and the rate of tax applicable in the jurisdiction to which it relates, discrete items in any quarter can materially impact the reported effective tax rate. As a global enterprise, our tax expense can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors. As a result, there can be significant volatility in interim tax provisions.
On December 20, 2021, the Organization for Economic Co-operation and Development (the "OECD") released Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large corporations at a minimum rate of 15% implemented via a top-up tax. The impacts of Pillar Two legislation were not material to the three and nine months ended September 30, 2025. We will continue to evaluate the impact of the Pillar Two Framework as legislative changes are enacted and additional guidance becomes available.
In January of 2025, the OECD issued administrative guidance that will limit the economic benefit of certain non-refundable tax credits ("Swiss credits"), which were granted to our Swiss subsidiaries in 2023. We may pay more top-up tax in the future as a result of the January 2025 guidance. Because we apply an accounting policy to exclude the effects of Pillar Two top-up taxes from our analysis of the realizability of certain deferred tax assets, our valuation allowance on the deferred tax asset for the Swiss credits will not be impacted by the January 2025 guidance.
On July 4, 2025, the One Big Beautiful Bill Act (“the Act”) was enacted into law in the United States ("U.S."). The Act includes multiple changes to U.S. tax legislation with various effective dates beginning in 2025. These changes include provisions related to the limitation of business interest expense, the international tax framework, and other elements of U.S. tax law. During the third quarter, we recorded a valuation allowance of approximately $47 million against historical deferred tax assets associated with interest expense that we do not anticipate being able to utilize in the future due to the enacted legislative changes. We are continuing to evaluate the income tax implications of the Act to our consolidated financial statements.