Note 7. Income Taxes

The Company files income tax returns for TG and ES in the Republic of Colombia. Colombia’s Tax Statute was reformed on December 23, 2014. A general corporate income Tax Rate applies at 25% and a CREE Tax based on taxable income applies at a rate of 9% to certain taxpayers including the Company. Prior to the reform, the CREE Tax would only apply up to tax years 2015. The reform makes the CREE tax rate of 9% permanent and an additional CREE Surtax will apply for the years 2015 through 2018 at varying rates.

The following table summarizes income tax rates under the tax reform law

	2015		2016		2017		2018		2019
Income Tax	25	%	25	%	25	%	25	%	25	%
CREE Tax	9	%	9	%	9	%	9	%	9	%
CREE Surtax	5	%	6	%	8	%	9	%	-
Total Tax on Income	39	%	40	%	42	%	43	%	34	%

The components of income tax expense (benefit) are as follows:

	(in thousands)
	Three months ended September 30,						Nine months ended September 30,
	2015			2014			2015			2014
Current income tax
Foreign	$	8,728		$	2,086		$	17,985		$	6,652
Deferred income tax
Foreign		(204)			(316)			(1,058)			352
Total Provision for Income tax	$	8,524		$	1,770		$	16,927		$	7,004

Effective tax rate		129	%		12	%		289	%		171	%

The Company's effective tax rates for the three and nine-month periods ended September 30, 2015 and 2014 reflect the non-cash, non-deductible losses and non-taxable gains from changes in the fair values of the Company’s warrant and earnout shares liabilities in the table below:

	Three months ended September 30,				Nine months ended September 30,
	2015		2014		2015		2014
Change in fair value of warrant liability		10,148		-6,756		21,461		6,769
Change in fair value of earnout shares liability		2,519		-1,861		10,191		9,897
Total non-cash, nontaxable effects of changes in fair value of liabilities		12,667		-8,617		31,652		16,666

In addition, the Company’s statutory tax rate increased from 34% in 2014 to 39% in 2014 because of the tax reform mentioned above.