7. INCOME TAXES

The Company records deferred tax assets and liabilities based on the difference between the financial statement and income tax basis of assets and liabilities using the enacted statutory tax rate in effect for the year these differences are expected to be taxable or reversed. Deferred income tax expenses or credits are based on the changes in the asset or liability from period to period. The recorded deferred tax assets are reviewed for impairment on a quarterly basis by reviewing the Company’s internal estimates for future taxable income.

As of March 31, 2013, the Company had a valuation allowance for its U.S. deferred tax assets of $5.0 million, a $0.9 million valuation allowance on its Calgary property and a $0.9 million valuation allowance on the CCE deferred tax assets due to the uncertainty of future taxable income. The Company assesses the continuing need for a valuation allowance that results from uncertainty regarding its ability to realize the benefits of the Company’s deferred tax assets. The ultimate realization of deferred income tax assets depends on generation of future taxable income during the periods in which those temporary differences become deductible. If the Company concludes that its prospects for the realization of its deferred tax assets changes, the Company will then adjust its valuation allowance as appropriate after considering the following factors:

·	The level of historical taxable income and projections for future taxable income over periods in which the deferred tax assets would be deductible;

·	Accumulation of net income before tax utilizing a look-back period of three years, and

·	Implementation of all tax planning strategies.

The Company’s provision for income taxes from operations consists of the following:


Amounts in thousands	For the three months ended March 31,
	2013	2012
U.S. Federal - Current	$ 0	($19)
U.S. Federal - Deferred	0	0
Provision for U.S. federal income taxes	0	(19)

Foreign - Current	$ 405	$ 239
Foreign - Deferred	(88)	72
Provision for foreign income taxes	317	311
Total provision for income taxes	$ 317	$ 292

The Company’s pre-tax income (loss) by jurisdiction is summarized in the table below:


	For the three months	For the three months
Amounts in thousands	ended March 31, 2013	ended March 31, 2012
	Pre-tax income (loss)	Pre-tax income
Canada	$ 1,520	$ 955
United States	181	5
Mauritius	136	103
Austria	278	246
Poland*	(136)	116
Total	$ 1,979	$ 1,425

.

* Poland includes loss from the equity investment in CPL.

The Company’s worldwide effective tax rate is 16.0%. A substantial portion of the Company’s earnings is from Canada, which has a 25% tax rate. In addition, the movement of exchange rates for intercompany loans denominated in U.S. dollars further impacts the Company’s effective tax rate because foreign currency gains and losses generally are not taxed until realized. Therefore, the Company’s overall effective tax rate can be significantly impacted by foreign currency gains or losses.