Income Taxes

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

	Quarter ended						Year to date
	2021			2020			2021			2020
Income tax (benefit) provision	$	(77)		$	33		$	22		$	96
Effective tax rate	(17.0)		%	10.5		%	1.8		%	14.4		%

Our third quarter effective tax rate was lower than the prior year primarily due to tax benefits resulting from a KFC Europe reorganization executed in the quarter ended September 30, 2021. In July 2021, we concentrated management responsibility for European (excluding the United Kingdom (“UK”)) KFC franchise development, support operations and management oversight in Switzerland. Concurrent with this change in management responsibility, we completed intra-entity transfers of certain KFC intellectual property rights from subsidiaries in the UK to subsidiaries in Switzerland. With the transfer of these rights, we

received a step-up in amortizable tax basis to current fair value under applicable Swiss tax law. As a result of this transfer, we recorded a net, one-time tax benefit of $152 million in the quarter ended September 30, 2021. In the quarter ended September 30, 2020, our effective rate was favorably impacted by $25 million due to the remeasurement of our deferred tax assets in the UK resulting from an increase in the UK corporate tax rate from 17% to 19% enacted during the quarter.Our year to date effective tax rate was also lower than the prior year due to tax benefits resulting from a $64 million favorable impact due to the remeasurement of our deferred tax assets in the UK resulting from an increase in the UK corporate tax rate from 19% to 25% enacted during the quarter ended June 30, 2021.