Huntsman Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2015

Schedule of income tax expense (benefit)

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

	Year ended December 31,
	2015		2014		2013
Income tax expense (benefit):
U.S.
Current	$	48	$	55		75
Deferred		21		(4)		79
Non-U.S.
Current		24		48		42
Deferred		(47)		(48)		(71)

Total	$	46	$	51	$	125

Schedule of reconciliation of the differences between the U.S. federal income taxes at the U.S. statutory rate to total provision for income taxes

The following schedule reconciles the differences between the U.S. federal income taxes at the U.S. statutory rate to our provision for income taxes (dollars in millions):

	Year ended December 31,
	2015		2014		2013
Income from continuing operations before income taxes	$	176	$	404	$	279


Expected tax expense at U.S. statutory rate of 35%	$	62	$	142	$	98
Change resulting from:
State tax expense net of federal benefit		(3)		10		11
Non-U.S. tax rate differentials		4		(7)		10
Effects of non-U.S. operations		(6)		3		1
U.S. domestic manufacturing deduction		(7)		(14)		(14)
Currency exchange gains and losses		(58)		(7)		14
Effect of tax holidays		(6)		—		—
U.S. foreign tax credits, net of associated income and taxes		(22)		(2)		(86)
Tax benefit of losses with valuation allowances as a result of other comprehensive income		(3)		(7)		(22)
Tax authority audits and dispute resolutions		10		3		9
Change in valuation allowance		75		(76)		100
Other, net		—		6		4

Total income tax expense	$	46	$	51	$	125

Schedule of components of income (loss) from continuing operations before income taxes

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

	Year ended December 31,
	2015			2014			2013
U.S.	$	243		$	435		$	419
Non-U.S.		(67	)		(31	)		(140	)

Total	$	176		$	404		$	279

Schedule of components of deferred income tax assets and liabilities

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

	December 31,
	2015			2014
Deferred income tax assets:
Net operating loss carryforwards	$	871		$	875
Pension and other employee compensation		280			313
Property, plant and equipment		97			109
Intangible assets		131			46
Foreign tax credits		14			17
Other, net		100			100

Total	$	1,493		$	1,460


Deferred income tax liabilities:
Property, plant and equipment	$	(577	)	$	(540	)
Pension and other employee compensation		(8	)		(2	)
Other, net		(128	)		(103	)

Total	$	(713	)	$	(645	)


Net deferred tax asset before valuation allowance	$	780		$	815
Valuation allowance—net operating losses and other		(784	)		(702	)

Net deferred tax asset	$	(4	)	$	113


Current deferred tax asset	$	—		$	62
Current deferred tax liability		—			(51	)
Non-current deferred tax asset		418			435
Non-current deferred tax liability		(422	)		(333	)

Net deferred tax liability	$	(4	)	$	113

Schedule of changes in valuation allowance

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

	2015			2014			2013
Valuation allowance as of January 1	$	702		$	814		$	736
Valuation allowance as of December 31		784			702			814

Net (increase) decrease		(82	)		112			(78	)
Foreign currency movements		(22	)		(49	)		16
(Decrease) increase to deferred tax assets with no impact on operating tax expense, including an offsetting (decrease) increase to valuation allowances		29			13			(38	)

Change in valuation allowance per rate reconciliation	$	(75	)	$	76		$	(100	)


Components of change in valuation allowance affecting tax expense:
Pre-tax losses in jurisdictions with valuation allowances resulting in no tax expense or benefit	$	(43	)	$	(32	)	$	(21	)
Releases of valuation allowances in various jurisdictions		3			111			16
Establishments of valuation allowances in various jurisdictions		(35	)		(3	)		(95	)

Change in valuation allowance per rate reconciliation	$	(75	)	$	76		$	(100	)

Schedule of reconciliation of unrecognized tax benefits

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

	2015			2014
Unrecognized tax benefits as of January 1	$	68		$	96
Gross increases and decreases—tax positions taken during a prior period		3			(18	)
Gross increases and decreases—tax positions taken during the current period		5			1
Decreases related to settlements of amounts due to tax authorities		(2	)		(5	)
Reductions resulting from the lapse of statutes of limitation		(8	)		(2	)
Foreign currency movements		(4	)		(4	)

Unrecognized tax benefits as of December 31	$	62		$	68

Schedule of interest and penalties accrued related to unrecognized tax benefits included in the income tax expense

	Year ended December 31,
	2015			2014		2013
Interest expense included in tax expense	$	(9	)	$	2	$	2
Penalties expense included in tax expense		—			—		(1	)

	December 31,
	2015		2014
Accrued liability for interest	$	4	$	14
Accrued liability for penalties		—		—

Summary of the tax years that remain subject to examination by major tax jurisdictions

Tax Jurisdiction		Open Tax Years
China		2011 and later
France		2002 and later
India		2004 and later
Italy		2010 and later
Malaysia		2003 and later
Switzerland		2009 and later
The Netherlands		2010 and later
United Kingdom		2012 and later
United States federal		2009 and later

Huntsman International

Income Tax