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

Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

December 31,

Accrued liability for interest

Accrued liability for penalties

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2017

Income Tax

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):

Huntsman Corporation


	Year ended December 31,
	2017		2016		2015
Income tax expense (benefit):
U.S.
Current	$	23	$	50	$	54
Deferred		(95)		(15)		17
Non-U.S.
Current		94		55		26
Deferred		42		19		(37)
Total	$	64	$	109	$	60

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):

Huntsman Corporation


	Year ended December 31,
	2017		2016		2015
Income from continuing operations before income taxes	$	647	$	474	$	488
Expected tax expense at U.S. statutory rate of 35%	$	227	$	166	$	171
Change resulting from:
State tax expense net of federal benefit		(2)		(1)		(3)
Non-U.S. tax rate differentials		(64)		(32)		(2)
Non-taxable portion of gain on sale of European surfactants business		—		(23)		—
U.S. Tax Reform Act impact		(52)		—		—
U.S. domestic manufacturing deduction		—		—		(7)
Currency exchange gains and losses		15		(5)		(38)
Effect of tax holidays		—		—		(6)
U.S. foreign tax credits, net of associated income and taxes		—		—		(22)
Tax benefit of losses with valuation allowances as a result of other comprehensive income		—		—		(2)
Tax authority audits and dispute resolutions		9		2		1
Change in valuation allowance		(72)		(38)		(13)
Other non-U.S. tax effects, including nondeductible expenses, tax effect of rate changes, transfer pricing adjustments and various withholding taxes		3		30		(20)
Other U.S. tax effects, including nondeductible expenses and other credits		—		10		1
Total income tax expense	$	64	$	109	$	60

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):

Huntsman Corporation


	Year ended December 31,
	2017		2016		2015
U.S.	$	(39)	$	91	$	265
Non-U.S.		686		383		223
Total	$	647	$	474	$	488

Schedule of components of deferred income tax assets and liabilities

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

Huntsman Corporation


	December 31,
	2017		2016
Deferred income tax assets:
Net operating loss carryforwards	$	411	$	539
Pension and other employee compensation		204		271
Property, plant and equipment		39		28
Intangible assets		93		99
Foreign tax credits		—		5
Other, net		49		60
Total	$	796	$	1,002
Deferred income tax liabilities:
Property, plant and equipment	$	(363)	$	(489)
Pension and other employee compensation		(5)		(1)
Intangible assets		(11)		(9)
Other, net		(49)		(125)
Total	$	(428)	$	(624)
Net deferred tax asset before valuation allowance	$	368	$	378
Valuation allowance—net operating losses and other		(424)		(496)
Net deferred tax liability	$	(56)	$	(118)
Non-current deferred tax asset		208		253
Non-current deferred tax liability		(264)		(371)
Net deferred tax liability	$	(56)	$	(118)

Schedule of changes in valuation allowance

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

Huntsman Corporation


	2017		2016		2015
Valuation allowance as of January 1	$	496	$	526	$	518
Valuation allowance as of December 31		424		496		526
Net (increase) decrease		72		30		(8)
Foreign currency movements		11		(11)		(4)
(Decrease) increase to deferred tax assets with no impact on operating tax expense, including an offsetting (decrease) increase to valuation allowances		(11)		19		25
Change in valuation allowance per rate reconciliation	$	72	$	38	$	13
Components of change in valuation allowance affecting tax expense:
Pre-tax income and losses in jurisdictions with valuation allowances resulting in no tax expense or benefit	$	50	$	31	$	31
Releases of valuation allowances in various jurisdictions		22		19		3
Establishments of valuation allowances in various jurisdictions		—		(12)		(21)
Change in valuation allowance per rate reconciliation	$	72	$	38	$	13

Schedule of reconciliation of unrecognized tax benefits

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


	2017		2016
Unrecognized tax benefits as of January 1	$	17	$	37
Gross increases and decreases—tax positions taken during a prior period		3		1
Gross increases and decreases—tax positions taken during the current period		4		3
Decreases related to settlements of amounts due to tax authorities		—		(21)
Reductions resulting from the lapse of statutes of limitation		(2)		(1)
Foreign currency movements		1		(2)
Unrecognized tax benefits as of December 31	$	23	$	17

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


	Year ended December 31,
	2017		2016		2015
Interest expense included in tax expense	$	—	$	1	$	—
Penalties expense included in tax expense		—		—		—

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


Tax Jurisdiction		Open Tax Years
China		2012 and later
France		2004 and later
Germany		2011 and later
India		2004 and later
Italy		2013 and later
Malaysia		2015 and later
Switzerland		2011 and later
The Netherlands		2015 and later
United Kingdom		2016 and later
United States federal		2009 and later

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

Income Tax

Schedule of income tax expense (benefit)


	Year ended December 31,
	2017		2016		2015
Income tax expense (benefit):
U.S.
Current	$	16	$	50	$	52
Deferred		(92)		(16)		17
Non-U.S.
Current		94		55		25
Deferred		43		19		(35)
Total	$	61	$	108	$	59

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


	Year ended December 31,
	2017		2016		2015
Income from continuing operations before income taxes	$	640	$	475	$	493
Expected tax expense at U.S. statutory rate of 35%	$	224	$	165	$	170
Change resulting from:
State tax expense net of federal benefit		(2)		(1)		(3)
Non-U.S. tax rate differentials		(64)		(32)		(2)
Non-taxable portion of gain on sale of European surfactants business		—		(23)		—
U.S. Tax Reform Act impact		(53)		—		—
U.S. domestic manufacturing deduction		—		—		(7)
Currency exchange gains and losses		15		(5)		(38)
Effect of tax holidays		—		—		(6)
U.S. foreign tax credits, net of associated income and taxes		—		—		(22)
Tax benefit of losses with valuation allowances as a result of other comprehensive income		—		—		(2)
Tax authority audits and dispute resolutions		9		2		1
Change in valuation allowance		(72)		(39)		(13)
Other non-U.S. tax effects, including nondeductible expenses, tax effect of rate changes, transfer pricing adjustments and various withholding taxes		4		32		(18)
Other U.S. tax effects, including nondeductible expenses and other credits		—		9		(1)
Total income tax expense	$	61	$	108	$	59

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


	Year ended December 31,
	2017		2016		2015
U.S.	$	(46)	$	92	$	268
Non-U.S.		686		383		225
Total	$	640	$	475	$	493

Schedule of components of deferred income tax assets and liabilities


	December 31,
	2017		2016
Deferred income tax assets:
Net operating loss carryforwards	$	411	$	542
Pension and other employee compensation		203		269
Property, plant and equipment		39		32
Intangible assets		93		99
Foreign tax credits		—		5
Other, net		49		59
Total	$	795	$	1,006
Deferred income tax liabilities:
Property, plant and equipment	$	(362)	$	(486)
Pension and other employee compensation		(5)		(1)
Intangible assets		(11)		(9)
Other, net		(50)		(125)
Total	$	(428)	$	(621)
Net deferred tax asset before valuation allowance	$	367	$	385
Valuation allowance—net operating losses and other		(424)		(499)
Net deferred tax liability	$	(57)	$	(114)
Non-current deferred tax asset		208		253
Non-current deferred tax liability		(265)		(367)
Net deferred tax liability	$	(57)	$	(114)

Schedule of changes in valuation allowance


	2017		2016		2015
Valuation allowance as of January 1	$	499	$	530	$	522
Valuation allowance as of December 31		424		499		530
Net (increase) decrease		75		31		(8)
Foreign currency movements		11		(11)		(4)
(Decrease) increase to deferred tax assets with no impact on operating tax expense, including an offsetting (decrease) increase to valuation allowances		(14)		19		25
Change in valuation allowance per rate reconciliation	$	72	$	39	$	13
Components of change in valuation allowance affecting tax expense:
Pre-tax income and losses in jurisdictions with valuation allowances resulting in no tax expense or benefit	$	49	$	32	$	31
Releases of valuation allowances in various jurisdictions		23		19		3
Establishments of valuation allowances in various jurisdictions		—		(12)		(21)
Change in valuation allowance per rate reconciliation	$	72	$	39	$	13