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Income Taxes

6 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

Note 11. Income Taxes

The Company files income tax returns for TG and ES in the Republic of Colombia. On December 28, 2016, the Colombian Congress enacted a structural tax reform that took effect on January 1, 2017 which reduces corporate income tax from 42% to 40% for fiscal year 2017, 37% in 2018 and 33% in 2019 and thereafter. As a result of the Colombian tax reform from December 28, 2016, the Company’s net deferred tax liability decreased $586 as of December 31, 2016.

ESW LLC is an LLC that was not subject to income taxes for the eleven month period ended December 2, 2016, since it was a pass-through entity for tax purposes. ESW LLC was converted to a C-Corporation and was subject to income taxes starting on December 3, 2016. The estimated income tax rate for C-Corporations ranges between 10% and 39.5%. Tecnoglass Inc. as well as all the other subsidiaries in the Cayman Islands and Panama do not currently have any tax obligations.

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

		Three months ended June 30,								Six months ended June 30,
		2017				2016				2017				2016
Current income tax:
United States		$	1,759			$	-			$	2,211			$	-
Foreign			(630	)			4,406				1,650				7,662
Total current income tax			1,129				4,406				3,861				7,662
Deferred income tax:
United States			(377	)			-				3				-
Foreign			(4,804	)			(345	)			(6,874	)			42
Total deferred income tax			(5,181	)			(345	)			(6,871	)			42
Total Provision for Income tax		$	(4,052	)		$	4,061			$	(3,010	)		$	7,704
Effective tax rate			43.1	%			15.7	%			40.4	%			21.0	%

The Company’s effective tax rate of 43.1% and 40.4% for the three and six-month period ended June 30, 2017, respectively, reflects the adoption of the Colombian tax reform described above, which became effective January 1, 2017. The Company’s effective tax rate of 15.7% and 21% for the three and six-month period ended June 30, 2016 reflects non-taxable gains of $6,687 and $12,598 due to the change in fair value of the Company’s warrant liability relative to their fair value at the beginning of the period during the three and six-month periods ended June 30, 2016, respectively, and non-taxable gain of $3,330 and $7,034 due to the change in fair value of the Company’s earn out share liability relative to their fair value as of at the beginning of the period during the three and six-month periods ended June 30, 2016, respectively.

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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://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

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