8.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 September 30, 2013, the Company had a valuation allowance for its U.S. deferred tax assets of $4.8 million, a $0.8 million valuation allowance on deferred tax assets related to 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 in the jurisdiction where the assets are present 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 in the jurisdiction where the assets are present 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 nine months ended September 30,
	2013	2012
U.S. Federal - Current	$ 0	$ 169
U.S. Federal - Deferred	0	0
Provision for U.S. federal income taxes	0	169

Foreign - Current	$ 1,183	$ 277
Foreign - Deferred	(498)	386
Provision for foreign income taxes	685	663
Total provision for income taxes	$ 685	$ 832

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


	For the nine months	For the nine months
Amounts in thousands	ended September 30, 2013	ended September 30, 2012
	Pre-tax income	Pre-tax income
Canada	$ 3,771	$ 2,145
United States	592	640
Mauritius	271	322
Austria	301	902
Poland	2,340	290
Total	$ 7,275	$ 4,299

The Company’s worldwide effective income tax rate is 9.4%. A substantial portion of the Company’s earnings are from Canada, which has a 25% income tax rate. In addition, the effective income tax rate in Poland is significantly lower than the statutory rate of 19% due to the $2.1 million gain related to the CPL acquisition, which is not taxable. Finally, the movement of exchange rates for intercompany loans denominated in U.S. dollars further impacts the Company’s effective income tax rate because foreign currency gains and losses generally are not taxed until realized. Therefore, the Company’s overall effective income tax rate can be significantly impacted by foreign currency gains or losses.