Income Taxes

3 Months Ended

Jul. 28, 2023

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

Our effective tax rates for the periods presented were as follows:

	Three Months Ended
	July 28,  2023			July 29, 2022
Effective tax rates		19.9	%		20.7	%

Our effective tax rate reflects the impact of a significant amount of earnings being taxed in foreign jurisdictions at rates below the United States (U.S.) statutory rate. Our effective tax rate for the three months ended July 28, 2023 decreased from the prior year, primarily due to increased fiscal 2023 foreign tax credits resulting from Internal Revenue Service Notice 2023-55 released during the quarter, partially offset by an increase in stock compensation for which no tax benefit is currently recorded. The effective tax rate for the three months ended July 29, 2022, includes larger discrete tax benefits related to stock-based compensation than the current year.

We are currently undergoing various income tax audits in the U.S. and audits in several foreign tax jurisdictions. Transfer pricing calculations are key topics under these audits and are often subject to dispute and appeals.

We continue to monitor the progress of ongoing discussions with tax authorities and the impact, if any, of the expected expiration of the statute of limitations in various taxing jurisdictions. We engage in continuous discussion and negotiation with taxing authorities regarding tax matters in multiple jurisdictions. We believe that within the next 12 months, it is reasonably possible that either certain audits will conclude, certain statutes of limitations will lapse, or both. As a result of uncertainties regarding tax audits and their possible outcomes, an estimate of the range of possible impacts to unrecognized tax benefits in the next twelve months cannot be made at this time.

As of July 28, 2023, we had $221 million of gross unrecognized tax benefits. Inclusive of penalties, interest and certain income tax benefits, $145 million would affect our provision for income taxes if recognized. Net unrecognized tax benefits of $145 million have been recorded in other long-term liabilities.