Income Taxes

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

	Quarter ended						Year to date
	2021			2020			2021			2020
Income tax provision	$	16		$	51		$	99		$	63
Effective tax rate	4.0		%	19.8		%	12.1		%	17.8		%

Our second quarter and year to date effective tax rates are lower than the prior year primarily due to tax benefits of $64 million recorded associated with the remeasurement of deferred tax assets necessitated by the enactment of the United Kingdom ("UK") Finance Act 2021 during the quarter ended June 30, 2021. The UK Finance Act 2021 increased the UK corporate income tax rate from 19% to 25%, beginning April 1, 2023. In addition, the year-over-year change in uncertain tax positions favorably impacted our effective tax rates for both the quarter and year to date.

KFC Europe Reorganization

In July 2021, we concentrated management responsibility for European (excluding the UK) KFC franchise development, support operations and management oversight in Switzerland. Concurrent with this change in management responsibility, we have completed intra-entity transfers of certain intellectual property rights to subsidiaries in Switzerland subsequent to the end of the quarter ended June 30, 2021. As a result of the transfers of these rights, we received a step-up in tax basis to current fair value under applicable Swiss tax law. To the extent this step-up in tax basis will be amortizable against future Swiss taxable income, we will recognize a one-time deferred tax benefit in the quarter ended September 30, 2021. We currently estimate this tax benefit, net of other tax costs of the reorganization, will exceed $100 million.