ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾

19. INCOME TAXESÌý

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The following is a summary of U.S. and non-U.S. provisions for current and deferred income taxes from continuing operations (dollars in millions):

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ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation

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ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International

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The following schedule reconciles the differences between the U.S. federal income taxes at the U.S. statutory rate to our total income tax expense from continuing operations (dollars in millions):

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ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation

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ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International

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During 2024, the weighted average statutory rate for countries with pre-tax income (primarily our operations in China (25% statutory rate) and Luxembourg (25% statutory rate))Ìýwas offset byÌýthe weighted average statutory rate for countries with pre-tax losses, resulting in a net tax benefit of $4 millionÌýas compared to the 21% U.S. statutory rate reflected in the reconciliation above. During 2023, the weighted average statutory rate for countries with pre-tax income (primarily our operations in China (25% statutory rate), Germany (30% statutory rate)Ìýand Luxembourg (25% statutory rate))Ìýwas offset by the weighted average statutory rate for countries with pre-tax losses, resulting in an immaterial difference as compared to the 21% U.S. statutory rate reflected in the reconciliation above. During 2022, the weighted average statutory rate for countries with pre-tax income (in primarily our operations in China (25% statutory rate), Germany (30% statutory rate)Ìýand Luxembourg (25% statutory rate))Ìýwas higher than the weighted average statutory rate for countries with pre-tax losses, resulting in a net expense of $8 million, as compared to the 21% U.S. statutory rate reflected in the reconciliation above.

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Under the U.S. Tax Reform Act’s global intangible low-taxed income (“GILTIâ€�) provision, our non-U.S. operations are generally subject to U.S. tax. We have elected to treat the GILTI as a current-period expense when incurred. The stated purpose of the GILTI rules is to generate additional U.S. tax related to income in non-U.S. jurisdictions which incur less than a blended 13.125% non-U.S. tax rate. Our non-U.S. income is subject to a blended rate greater than 13.125%; however, in practice, the GILTI regulations result in additional tax liability fromÌýexpense allocations which limit our ability to utilize foreign tax credits against the GILTI inclusion. For 2024, 2023 and 2022, we incurred a tax benefit of $6Ìýmillion, tax expense of $3Ìýmillion and tax expense of $3Ìýmillion, respectively, resulting from these expense allocations, net of other U.S. taxation on foreign operations and foreign tax credits.Ìý

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The components of (loss) income from continuing operations before income taxes were as follows (dollars in millions):

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ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation

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ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International

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Components of deferred income tax assets and liabilities were as follows (dollars in millions):

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ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation

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ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International

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We evaluate deferred tax assets to determine whether it is more likely than not that they will be realized. Valuation allowances are reviewed each period on a tax jurisdiction basis and analyzed to determine whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets. These conclusions require significant judgment. In evaluating the objective evidence that historical results provide, we consider cumulative income or losses during the applicable three-year period. Cumulative losses incurred over the three-year period limits our ability to consider other evidence such as our projections for the future. Our judgments regarding valuation allowances are also influenced by factors outside of business results, including the costs and risks associated with any tax planning associated with utilizing a deferred tax asset.

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With the negative economic impacts of recent events, including economic challenges in Europe, we established a $10 million valuation allowance against the entire net deferred tax asset of our largest tax filing group in Germany as of December 31, 2024. We also established $13 million of significant valuation allowances on certain net deferred tax assets in Luxembourg in the fourth quarter of 2024 as a result of changes in estimated future taxable income resulting from decreased intercompany receivables and, therefore, decreased income in Luxembourg, our primary treasury center outside of the U.S. We also had miscellaneous non-significant valuation allowance establishments totaling $6 million in 2024. We established a $14 million valuation allowance against the entire net deferred tax asset in the U.K. as of December 31, 2023, and a $49 million valuation allowance against the entire net deferred tax asset in the Netherlands as of December 31, 2022.

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We have gross net operating losses (“NOLsâ€�) of $960Ìýmillion ($239Ìýmillion tax-effected) in various non-U.S. jurisdictions. While the majority of the non-U.S. NOLs have no expiration date, $37Ìýmillion ($6Ìýmillion tax-effected) have a limited life (of which $1Ìýmillion (immaterial tax effect)Ìýare subject to a valuation allowance), of which none are scheduled to expire in 2025. We had noÌýNOLs expire unused in 2024.Ìý

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We have gross U.S. federal NOLs of $182Ìýmillion ($38Ìýmillion tax-effected), the majority of which are not subject to expiration. We expect to be able to utilize all of these NOLs, and therefore they are not subject to a valuation allowance.

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Included in the $960Ìýmillion of gross non-U.S. NOLs is $224Ìýmillion ($53Ìýmillion tax-effected) attributable to our Luxembourg entities. As of DecemberÌý31, 2024, due to the uncertainty surrounding the realization of the benefits of these losses, there is a valuation allowance of $29Ìýmillion against these net tax-effected NOLs of $53Ìýmillion.

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We have $11Ìýmillion tax effected federal andÌýstate capital loss carryovers, all of which are subject to a valuation allowance. Capital loss carryovers may only be utilized against capital gains and have a 5-year carryforward period, generally expiring at the end of 2028.Ìý

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We have gross U.S. federal deferred interest deductions of $148 million ($31 million tax-effected), which are limited to deduction of 30% of adjusted taxable income, but are not subject to expiration. We expect to be able to utilize all of these deferred interest deductions and, therefore, they are not subject to a valuation allowance. Deferred interest deductions of $65 million, tax-effected in the Netherlands, are deduction-limited based on a percentage of EBITDA, are not subject to expiration and which are subject to a full valuation allowance.

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Uncertainties regarding expected future income in certain jurisdictions could affect the realization of deferred tax assets in those jurisdictions and result in additional valuation allowances in future periods, or, in the case of unexpected pre-tax earnings, the release of valuation allowances in future periods.

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The following is a summary of changes in the valuation allowance (dollars in millions):

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ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation

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ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International

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The following is a reconciliation of our unrecognized tax benefits (dollars in millions):

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As of December 31, 2024 and 2023, the amount of unrecognized tax benefits (not including interest and penalties) which, if recognized, would affect the effective tax rate is $2Ìýmillion and $5Ìýmillion, respectively. During 2023, we recorded a $32Ìýmillion decrease to our unrecognized tax benefits related to the timing of tax losses on our Venator investment. This decrease was offset by a decrease in net deferred tax assets and, therefore, did not affect income tax expense.Ìý

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On February 28, 2023, we completed the sale of our Textile Effects Business to Archroma. Due to the sale of these legal entities, our unrecognized tax benefits (and associated interest and penalties) transferred to Archroma with no corresponding income tax benefit for the reduction since we have provided indemnification for pre-acquisition income taxes.

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During 2024, we concluded and settled tax examinations in the U.S. (federal and various states), Belgium, China, Germany and Italy. During 2023, we concluded and settled tax examinations in the U.S. (federal and various states), Germany, Indonesia, SingaporeÌýand Thailand. During 2022, we concluded and settled tax examinations in the U.S. (federal and various states), China and Japan.Ìý

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During 2024, for unrecognized tax benefits that impact tax expense, we recorded no net change. During 2023, for unrecognized tax benefits that impact tax expense, we recorded a net decrease in unrecognized tax benefits with a corresponding income tax benefit (not including interest and penalties) of $1Ìýmillion. During 2022, for unrecognized tax benefits that impact tax expense, we recorded a net increase in unrecognized tax benefits with a corresponding income tax expense (not including interest and penalties) of $3Ìýmillion.Ìý

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WeÌýrecognized accrued interest related to unrecognized tax benefits in income tax expense as provided below (dollars in millions):

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We conduct business globally, andÌýas a result, we file income tax returns in U.S. federal, various U.S. state and various non-U.S. jurisdictions. The following table summarizes the tax years that remain subject to examination by major tax jurisdictions:

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Certain of our U.S. and non-U.S. income tax returns are currently under various stages of audit by applicable tax authorities and the amounts ultimately agreed upon in resolution of the issues raised may differ materially from the amounts accrued.

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We estimate that it is not reasonably possible that ourÌýunrecognized tax benefits would significantly change within 12 months of the reporting date.

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In connection with the provisions of U.S. Tax Reform, all non-U.S. earnings have generally been subject to U.S. tax and may be repatriated without incurring additional U.S. tax liability. Such repatriation may potentially be subject to limited foreign withholding taxes.ÌýWe intend to continue to invest most of these earnings indefinitely within the local countries and do not expect to incur any significant additional taxes. There are certain countries where we do intend to repatriate some of our earnings, and we have accrued all withholding taxes for such amounts.

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