INCOME TAXES

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The Company provides for income taxes at the end of each interim period based on the estimated effective tax rate (“ETR”) for the full fiscal year. Cumulative adjustments to the Company’s estimate are recorded in the interim period in which a change in the estimated annual ETR is determined. Under the provisions of the Internal Revenue Code of 1986, as amended, the Company may deduct amounts distributed to stockholders against the income generated by its real estate investment trust (“REIT”) operations. The Company continues to be subject to income taxes on the income of its domestic taxable REIT subsidiaries and income taxes in foreign jurisdictions where it conducts operations.

The Company provides valuation allowances if, based on the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Management assesses the available evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. Valuation allowances may be reversed if, based on changes in facts and circumstances, the net deferred tax assets have been determined to be realizable.

The income tax provision for the three and six months ended June 30, 2023 includes a benefit from the application of a tax law change in Kenya. The increases in the income tax provision during the three and six months ended June 30, 2023 were primarily attributable to the reversal of valuation allowances of $42.5 million and $79.7 million, respectively, in certain foreign jurisdictions in the prior year. These valuation allowance reversals were recognized as a reduction to the income tax provision in the prior year as the net related deferred tax assets were deemed realizable based on changes in facts and circumstances relevant to the assets’ recoverability.

As of June 30, 2023 and December 31, 2022, the total unrecognized tax benefits that would impact the ETR, if recognized, were approximately $86.4 million and $103.6 million, respectively. The amount of unrecognized tax benefits during the three and six months ended June 30, 2023 includes (i) additions to the Company’s existing tax positions of $1.4 million and $2.6 million, respectively, (ii) additions due to foreign currency exchange rate fluctuations of $2.3 million and $3.5 million, respectively, (iii) reductions due to settlements of $3.5 million and $11.0 million, respectively, (iv) reductions due to the expiration of statue of limitations of $0.7 million for each of the three and six months ended June 30, 2023 and (v) reductions due to credits available against existing tax positions of $11.6 million for the six months ended June 30, 2023. Unrecognized tax benefits are expected to change over the next 12 months if certain tax matters ultimately settle with the applicable taxing jurisdiction during this time frame, as described in note 12 to the Company’s consolidated financial statements included in the 2022 Form 10-K. The impact of the amount of these changes to previously recorded uncertain tax positions could range from zero to $16.4 million.

The Company recorded the following penalties and income tax-related interest expense during the three and six months ended June 30, 2023 and 2022:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Penalties and income tax-related interest expense	$	3.2	$	4.2	$	6.0	$	11.5

As of June 30, 2023 and December 31, 2022, the total amount of accrued income tax related interest and penalties included in the consolidated balance sheets were $43.6 million and $43.3 million, respectively.