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, 2018

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,
	2018		2017		2016
Income tax expense (benefit):
U.S.
Current	$	57	$	23	$	50
Deferred		19		(95)		(15)
Non-U.S.
Current		155		94		55
Deferred		(134)		42		19
Total	$	97	$	64	$	109

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,
	2018		2017		2016
Income from continuing operations before income taxes	$	942	$	647	$	474
Expected tax expense at U.S. statutory rate of 21%, 35% and 35% respectively	$	198	$	227	$	166
Change resulting from:
State tax expense net of federal benefit		5		(2)		(1)
Non-U.S. tax rate differentials		29		(64)		(32)
Non-taxable portion of gain on sale of European surfactants business		—		—		(23)
U.S. Tax Reform Act impact		32		(52)		—
Currency exchange gains/losses (net)		(10)		15		(5)
Non-U.S. income subject to U.S. tax not offset by U.S. foreign tax credits		16		—		—
Tax authority audits and dispute resolutions		5		9		2
Share-based compensation excess tax benefits		(14)		(10)		—
Change in valuation allowance		(185)		(72)		(38)
Fair value adjustments to Venator investment		18		—		—
Impact of equity method investments		(14)		(3)		(1)
Other non-U.S. tax effects, including nondeductible expenses, tax effect of rate changes, transfer pricing adjustments and various withholding taxes		17		7		31
Other U.S. tax effects, including nondeductible expenses and other credits		—		9		10
Total income tax expense	$	97	$	64	$	109

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,
	2018		2017		2016
U.S.	$	165	$	(39)	$	91
Non-U.S.		777		686		383
Total	$	942	$	647	$	474

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,
	2018		2017
Deferred income tax assets:
Net operating loss carryforwards	$	359	$	411
Pension and other employee compensation		198		205
Property, plant and equipment		20		29
Intangible assets		79		88
Unrealized currency gains		—		8
Other, net		45		46
Total	$	701	$	787
Deferred income tax liabilities:
Property, plant and equipment	$	(363)	$	(351)
Pension and other employee compensation		—		(3)
Intangible assets		(34)		(7)
Unrealized currency losses		(37)		(27)
Other, net		(12)		(31)
Total	$	(446)	$	(419)
Net deferred tax asset before valuation allowance	$	255	$	368
Valuation allowance—net operating losses and other		(227)		(424)
Net deferred tax asset (liability)	$	28	$	(56)
Non-current deferred tax asset		324		208
Non-current deferred tax liability		(296)		(264)
Net deferred tax asset (liability)	$	28	$	(56)

Schedule of changes in valuation allowance

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

Huntsman Corporation


	2018		2017		2016
Valuation allowance as of January 1	$	424	$	496	$	526
Valuation allowance as of December 31		227		424		496
Net (increase) decrease		197		72		30
Foreign currency movements		3		11		(11)
(Decrease) increase to deferred tax assets with no impact on operating tax expense, including an offsetting (decrease) increase to valuation allowances		(15)		(11)		19
Change in valuation allowance per rate reconciliation	$	185	$	72	$	38
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	$	53	$	50	$	31
Releases of valuation allowances in various jurisdictions		132		22		19
Establishments of valuation allowances in various jurisdictions		—		—		(12)
Change in valuation allowance per rate reconciliation	$	185	$	72	$	38

Schedule of reconciliation of unrecognized tax benefits

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


	2018		2017
Unrecognized tax benefits as of January 1	$	23	$	17
Gross increases and decreases—tax positions taken during a prior period		1		3
Gross increases and decreases—tax positions taken during the current period		3		4
Decreases related to settlements of amounts due to tax authorities		—		—
Reductions resulting from the lapse of statutes of limitation		—		(2)
Foreign currency movements		(1)		1
Unrecognized tax benefits as of December 31	$	26	$	23

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


	Year ended December 31,
	2018		2017		2016
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		2009 and later
Hong Kong		2015 and later
Germany		2013 and later
India		2004 and later
Italy		2014 and later
Mexico		2013 and later
Switzerland		2011 and later
Thailand		2012 and later
The Netherlands		2015 and later
United Kingdom		2017 and later
United States federal		2017 and later

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

Income Tax

Schedule of income tax expense (benefit)


	Year ended December 31,
	2018		2017		2016
Income tax expense (benefit):
U.S.
Current	$	57	$	16	$	50
Deferred		15		(92)		(16)
Non-U.S.
Current		155		94		55
Deferred		(134)		43		19
Total	$	93	$	61	$	108

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,
	2018		2017		2016
Income from continuing operations before income taxes	$	924	$	640	$	475
Expected tax expense at U.S. statutory rate of 21%, 35% and 35% respectively	$	194	$	224	$	165
Change resulting from:
State tax expense net of federal benefit		5		(2)		(1)
Non-U.S. tax rate differentials		29		(64)		(32)
Non-taxable portion of gain on sale of European surfactants business		—		—		(23)
U.S. Tax Reform Act impact		32		(53)		—
Currency exchange gains/losses (net)		(10)		15		(5)
Non-U.S. income subject to U.S. tax not offset by U.S. foreign tax credits		16		—		—
Tax authority audits and dispute resolutions		5		9		2
Share-based compensation excess tax benefits		(14)		(10)		—
Change in valuation allowance		(185)		(72)		(39)
Fair value adjustments to Venator investment		18		—		—
Impact of equity method investments		(14)		(3)		(1)
Other non-U.S. tax effects, including nondeductible expenses, tax effect of rate changes, transfer pricing adjustments and various withholding taxes		17		8		33
Other U.S. tax effects, including nondeductible expenses and other credits		—		9		9
Total income tax expense	$	93	$	61	$	108

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


	Year ended December 31,
	2018		2017		2016
U.S.	$	147	$	(46)	$	92
Non-U.S.		777		686		383
Total	$	924	$	640	$	475

Schedule of components of deferred income tax assets and liabilities


	December 31,
	2018		2017
Deferred income tax assets:
Net operating loss carryforwards	$	359	$	411
Pension and other employee compensation		198		205
Property, plant and equipment		20		29
Intangible assets		79		88
Unrealized currency gains		—		8
Other, net		45		46
Total	$	701	$	787
Deferred income tax liabilities:
Property, plant and equipment	$	(363)	$	(351)
Pension and other employee compensation		—		(3)
Intangible assets		(34)		(7)
Unrealized currency losses		(37)		(27)
Other, net		(10)		(32)
Total	$	(444)	$	(420)
Net deferred tax asset before valuation allowance	$	257	$	367
Valuation allowance—net operating losses and other		(227)		(424)
Net deferred tax asset (liability)	$	30	$	(57)
Non-current deferred tax asset		324		208
Non-current deferred tax liability		(294)		(265)
Net deferred tax asset (liability)	$	30	$	(57)

Schedule of changes in valuation allowance


	2018		2017		2016
Valuation allowance as of January 1	$	424	$	499	$	530
Valuation allowance as of December 31		227		424		499
Net (increase) decrease		197		75		31
Foreign currency movements		3		11		(11)
(Decrease) increase to deferred tax assets with no impact on operating tax expense, including an offsetting (decrease) increase to valuation allowances		(15)		(14)		19
Change in valuation allowance per rate reconciliation	$	185	$	72	$	39
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	$	53	$	49	$	32
Releases of valuation allowances in various jurisdictions		132		23		19
Establishments of valuation allowances in various jurisdictions		—		—		(12)
Change in valuation allowance per rate reconciliation	$	185	$	72	$	39