Income Taxes (Tables)

3 Months Ended

Mar. 31, 2021

Income Tax Benefit (Expense) Reconciliation Table

Income tax expense attributable to our earnings before income taxes differs from the amounts computed using the applicable income tax rate as a result of the following factors:


	Three months ended March 31,
		2021		2020
		in millions

Computed “expected” tax expense (a)		$	(306.1)	$	(192.1)
Non-deductible or non-taxable foreign currency exchange results		119.7		153.6
Change in valuation allowances		34.5		(88.7)
International rate differences (b)		(23.9)		(16.1)
Recognition of previously unrecognized tax benefits		20.5		—
Non-deductible or non-taxable interest and other items		(15.7)		(20.4)
Tax benefit associated with technology innovation (c)		5.8		44.8
Enacted tax law and rate changes		(0.3)		36.1
Basis and other differences in the treatment of items associated with investments in subsidiaries and affiliates (d)		0.2		3.1
Other, net		(5.2)		(0.4)
Total income tax expense		$	(170.5)	$	(80.1)

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(a)The statutory or “expected” tax rates are the U.K. rates of 19.0% for the 2021 period and 17.5% for the 2020 period. The statutory rate for the 2020 period represents the blended rate in effect for the year ended December 31, 2020 based on the 19.0% statutory rate that was in effect for the first quarter of 2020 and the 17.0% statutory rate that was expected to be in effect for the remainder of 2020. On July 22, 2020, legislation was enacted in the U.K. to maintain the corporate income tax rate at 19.0%, reversing previous legislation that had reduced the U.K. rate to 17.0% from April 1, 2020. The impact

of this rate change on our deferred balances was recorded during the third quarter of 2020. In March 2021, it was announced that the U.K. corporate tax rate will increase to 25% from April 1, 2023. This U.K. rate change has yet to be enacted and the impact on our deferred tax balances will not be recorded until the quarter of enactment.

(b)Amounts reflect adjustments (either a benefit or expense) to the “expected” tax benefit (expense) for statutory rates in jurisdictions in which we operate outside of the U.K.

(c)Amount reflects the recognition of the innovation income tax deduction in Belgium. The amount for the 2020 period includes the one-time effect of deductions related to prior periods.

(d)These amounts reflect the net impact of differences in the treatment of income and loss items between financial reporting and tax accounting related to investments in subsidiaries and affiliates, including the effects of foreign earnings.