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, 2016

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,
	2016			2015			2014
Income tax (benefit) expense:
U.S.
Current	$	(4	)	$	48		$	55
Deferred		25			21			(4	)
Non-U.S.
Current		75			24			48
Deferred		(9	)		(47	)		(48	)

Total	$	87		$	46		$	51

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,
	2016			2015			2014
Income from continuing operations before income taxes	$	448		$	176		$	404


Expected tax expense at U.S. statutory rate of 35%	$	157		$	62		$	142
Change resulting from:
State tax expense net of federal benefit		(1	)		(3	)		10
Non-U.S. tax rate differentials		(47	)		4			(7	)
Non-taxable portion of gain on sale of European surfactants business		(23	)		—			—
U.S. domestic manufacturing deduction		—			(7	)		(14	)
Currency exchange gains and losses		(4	)		(58	)		(7	)
Effect of tax holidays		—			(6	)		—
U.S. foreign tax credits, net of associated income and taxes		—			(22	)		(2	)
Tax benefit of losses with valuation allowances as a result of other comprehensive income		(1	)		(3	)		(7	)
Tax authority audits and dispute resolutions		(6	)		10			3
Change in valuation allowance		(13	)		75			(76	)
Other non-U.S. tax effects, including nondeductible expenses, tax effect of rate changes, transfer pricing adjustments and various withholding taxes		19			(6	)		3
Other U.S. tax effects, including nondeductible expenses and other credits		6			—			6

Total income tax expense	$	87		$	46		$	51

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,
	2016		2015			2014
U.S.	$	66	$	243		$	435
Non-U.S.		382		(67	)		(31	)

Total	$	448	$	176		$	404

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,
	2016			2015
Deferred income tax assets:
Net operating loss carryforwards	$	848		$	871
Pension and other employee compensation		329			280
Property, plant and equipment		85			97
Intangible assets		118			131
Foreign tax credits		5			14
Other, net		87			100

Total	$	1,472		$	1,493


Deferred income tax liabilities:
Property, plant and equipment	$	(611	)	$	(577	)
Pension and other employee compensation		(1	)		(8	)
Other, net		(134	)		(128	)

Total	$	(746	)	$	(713	)


Net deferred tax asset before valuation allowance	$	726		$	780
Valuation allowance—net operating losses and other		(757	)		(784	)

Net deferred tax liability	$	(31	)	$	(4	)


Non-current deferred tax asset		396			418
Non-current deferred tax liability		(427	)		(422	)

Net deferred tax liability	$	(31	)	$	(4	)

Schedule of changes in valuation allowance

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

	2016			2015			2014
Valuation allowance as of January 1	$	784		$	702		$	814
Valuation allowance as of December 31		757			784			702

Net (increase) decrease		27			(82	)		112
Foreign currency movements		(35	)		(22	)		(49	)
(Decrease) increase to deferred tax assets with no impact on operating tax expense, including an offsetting (decrease) increase to valuation allowances		21			29			13

Change in valuation allowance per rate reconciliation	$	13		$	(75	)	$	76


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	)
Releases of valuation allowances in various jurisdictions		25			3			111
Establishments of valuation allowances in various jurisdictions		(12	)		(35	)		(3	)

Change in valuation allowance per rate reconciliation	$	13		$	(75	)	$	76

Schedule of reconciliation of unrecognized tax benefits

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

	2016			2015
Unrecognized tax benefits as of January 1	$	62		$	68
Gross increases and decreases—tax positions taken during a prior period		1			3
Gross increases and decreases—tax positions taken during the current period		2			5
Decreases related to settlements of amounts due to tax authorities		(22	)		(2	)
Reductions resulting from the lapse of statutes of limitation		(4	)		(8	)
Foreign currency movements		(2	)		(4	)

Unrecognized tax benefits as of December 31	$	37		$	62

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

	Year ended December 31,
	2016			2015			2014
Interest expense included in tax expense	$	(1	)	$	(9	)	$	2
Pentalties expense included in tax expense		—			—			—

	December 31,
	2016		2015
Accrued liabilitiy for interest	$	3	$	4
Accrued liability for penalties		—		—

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

Tax Jurisdiction		Open Tax Years
China		2012 and later
France		2002 and later
Germany		2011 and later
India		2004 and later
Italy		2012 and later
Malaysia		2012 and later
Switzerland		2010 and later
The Netherlands		2013 and later
United Kingdom		2015 and later
United States federal		2009 and later

Huntsman International

Income Tax