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Income Tax | 6 Months Ended
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Jun. 30, 2024
Income Tax Disclosure [Abstract] |
Income Tax | Income Tax The components of income tax expense for the three and six months ended June 30, 2024 and 2023, respectively, consisted of the following:
|  | Three months ended June 30, |  | Six months ended June 30,
(In thousands) |  | 2024 |  | 2023 |  | 2024 |  | 2023
Current tax provision |  | $ | 8,705 |  |  | $ | 7,845 |  |  | $ | 14,717 |  |  | $ | 12,871 |
Deferred tax benefit |  | (7,604) |  |  | (1,259) |  |  | (13,324) |  |  | (3,467) |
Income tax expense |  | $ | 1,101 |  |  | $ | 6,586 |  |  | $ | 1,393 |  |  | $ | 9,404 |
The Company conducts operations in Puerto Rico, the United States, and certain countries in Latin America. As a result, the income tax expense includes the effect of taxes paid to the government of Puerto Rico as well as foreign jurisdictions. The following table presents the components of income tax expense for the three and six months ended June 30, 2024 and 2023, and its segregation based on location of operations:
|  | Three months ended June 30, |  |  | Six months ended June 30,
(In thousands) |  | 2024 |  | 2023 |  |  | 2024 |  | 2023
Current tax provision |  |  |  |  |  |  |  |  |
Puerto Rico |  | $ | 1,724 |  |  | $ | 2,595 |  |  |  | $ | 2,330 |  |  | $ | 3,775 |
United States |  | 39 |  |  | 47 |  |  |  | 129 |  |  | 58 |
Foreign countries |  | 6,942 |  |  | 5,203 |  |  |  | 12,258 |  |  | 9,038 |
Total current tax provision |  | $ | 8,705 |  |  | $ | 7,845 |  |  |  | $ | 14,717 |  |  | $ | 12,871 |
Deferred tax benefit |  |  |  |  |  |  |  |  |
Puerto Rico |  | $ | (3,666) |  |  | $ | (189) |  |  |  | $ | (7,325) |  |  | $ | (424) |
United States |  | 11 |  |  | 29 |  |  |  | 2 |  |  | 3 |
Foreign countries |  | (3,949) |  |  | (1,099) |  |  |  | (6,001) |  |  | (3,046) |
Total deferred tax benefit |  | $ | (7,604) |  |  | $ | (1,259) |  |  |  | $ | (13,324) |  |  | $ | (3,467) |
Taxes payable to foreign countries by EVERTEC’s subsidiaries is paid by such subsidiary and the corresponding liability and expense will be presented in EVERTEC’s consolidated financial statements. As of June 30, 2024, the Company had $148.4 million of unremitted earnings from foreign subsidiaries, compared to $137.0 million as of December 31, 2023. The Company has not recognized a deferred tax liability on undistributed earnings for the Company’s foreign subsidiaries because these earnings are intended to be indefinitely reinvested. As of June 30, 2024, the gross deferred tax asset amounted to $68.6 million and the gross deferred tax liability amounted to $85.8 million, compared to $65.4 million and $100.9 million, respectively, as of December 31, 2023. As of June 30, 2024, and December 31, 2023, there is a valuation allowance against the gross deferred tax asset of approximately $5.1 million and $4.6 million, respectively. The Company estimates that it is reasonably possible that the liability for uncertain tax position created from acquisitions in foreign jurisdictions will decrease by approximately $2.7 million in the next 12 months as a result of the expiration of the statute of limitations. Income tax expense differs from the amount computed by applying the Puerto Rico statutory income tax rate to the income before income taxes as a result of the following:
|  | Six months ended June 30,
(In thousands) |  | 2024 |  | 2023
Computed income tax at statutory rates |  | $ | 18,864 |  |  | $ | 25,319 |
Differences in tax rates due to multiple jurisdictions |  | 2,806 |  |  | 2,350 |
Effect of income subject to tax-exemption grant |  | (20,095) |  |  | (16,219) |
Unrecognized tax expense |  | (1,192) |  |  | 69 |
Excess tax benefits on share-based compensation |  | (511) |  |  | (23) |
Tax credits for research and development activities |  | — |  |  | (884) |
Other, net |  | 1,521 |  |  | (1,208) |
Income tax expense |  | $ | 1,393 |  |  | $ | 9,404 |

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