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INCOME TAXES
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The components of the Company’s (loss) income before income taxes are attributable to the following jurisdictions for the years ended December 31 (in thousands):
20222021
United States$(7,822)$6,947 
Foreign7,343 1,945 
(Loss) income before income taxes$(479)$8,892 

The components of the Company’s income tax provision (benefit) for the years ended December 31 (in thousands):
Current provision (benefit):20222021
Federal$241 $(17)
State(37)(161)
Foreign2,581 956 
2,785 778 
Deferred provision (benefit):
Federal1,200 (1,183)
State81 (131)
Foreign(55)(414)
1,226 (1,728)
$4,011 $(950)

For the years ended December 31, 2022 and 2021, the Company’s effective tax rate was (837.4)% and (10.7)%, respectively. The Company's effective tax rate for the year ended December 31, 2022 differed from the statutory rate due to additional taxes assessed as a result of the settlement of the income tax audit in Korea, the Company recording a valuation allowance on U.S. deferred tax assets largely driven by changes in expected earnings mix between jurisdictions, and the relative impact of these items on decreased earnings. The Company's effective tax rate for the year ended December 31, 2021 differed from the statutory rate due to the release of valuation allowance on U.S. deferred tax assets due to the expectation of current and future utilization.
A reconciliation of the Company’s effective income tax rate and the United States federal statutory income tax rate is summarized as follows, for the years ended December 31:
20222021
Federal statutory income taxes21.0 %21.0 %
State income taxes, net of federal benefit20.7 0.8 
Difference in foreign and United States tax on foreign operations(24.8)0.7 
Assessments from taxing authorities(278.5)— 
Effect of changes in valuation allowance(383.7)(45.0)
Foreign Derived Intangible Income (FDII) deduction— (8.1)
Credits generated15.2 (0.5)
Effect of changes in tax rates19.4 0.2 
Foreign charitable contributions(12.5)0.7 
Return to provision adjustments(43.4)1.3 
Withholding taxes(50.3)2.5 
Changes to uncertain tax positions— (1.8)
Expiration of tax attribute(135.5)17.4 
Other15.0 0.1 
(837.4)%(10.7)%
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities consisted of the following at December 31 (in thousands):
Deferred tax assets:20222021
Deferred Revenue$629 $409 
Inventory260 235 
Accrued expenses1,240 1,352 
Net operating loss (1)
4,956 5,310 
Equity Compensation240 242 
Foreign tax credit carryover3,333 3,436 
Lease liability673 763 
Capitalized research & development218 — 
Other968 664 
Total deferred tax assets$12,517 $12,411 
Valuation allowance(9,772)(7,934)
Total deferred tax assets, net of valuation allowance$2,745 $4,477 
Deferred tax liabilities:
Prepaid expenses41 111 
Deferred commissions418 450 
Internally-developed software— 104 
Lease assets624 717 
Fixed assets161 270 
Total deferred tax liabilities$1,244 $1,652 
Total net deferred tax asset$1,501 $2,825 

(1)The Company’s net operating loss will expire as follows (dollar amounts in thousands):
JurisdictionGross NOLTax Effected NOLExpiration Years
Australia$120 $36 Indefinite
Bermuda73 — N/A
Cyprus1,373 172 2023-2027
Denmark1 — Indefinite
Gibraltar253 32 Indefinite
Mexico6,136 1,840 2023-2028
Netherlands5 1 Indefinite
Norway267 59 Indefinite
Russia
8 2 Indefinite
Singapore148 25 Indefinite
South Africa631 170 Indefinite
Sweden424 87 Indefinite
Switzerland4,510 415 2023-2029
Taiwan3,081 616 2023-2032
Ukraine
7 1 Indefinite
United Kingdom275 69 Indefinite
United States - Federal2,835 596 Indefinite
United States - State14,248 835 2023-Indefinite
                


We have U.S. foreign tax credit carryforwards of $3.3 million as of December 31, 2022, which will begin to expire in 2024. The Company maintains a valuation allowance of $3.3 million against its foreign tax credit carryforwards.

At December 31, 2022 and 2021, the Company’s valuation allowance was $9.8 million and $7.9 million, respectively. The provisions of ASC Topic 740 require a company to record a valuation allowance when the “more likely than not” criterion for realizing a deferred tax asset cannot be met. A company is to use judgment in reviewing both positive and negative evidence of realizing a deferred tax asset. Furthermore, the weight given to the potential effect of such evidence is commensurate with the extent the evidence can be objectively verified. The valuation allowance against the Company's deferred tax assets consisted of the following at December 31 (in millions):
Country20222021
China$0.4 $0.5 
Colombia— 0.5 
Cyprus0.2 0.2 
Mexico1.8 1.9 
Norway0.1 0.1 
South Africa0.2 0.2 
Switzerland0.3 0.5 
Taiwan0.6 0.6 
United States6.2 3.4 
Total$9.8 $7.9 

As of December 31, 2022 and 2021, the Company had no unrecognized tax benefits.
The Company recognizes interest and/or penalties related to uncertain tax positions in current income tax expense. As of December 31, 2022 and 2021, the Company had no accrued interest and penalties in the consolidated balance sheet or the consolidated statement of operations.
The Company is subject to examination by taxing authorities in the United States and various state and foreign jurisdictions. As of December 31, 2022, the tax years that remained subject to examination by a major tax jurisdiction for the Company’s most significant subsidiaries were as follows:
JurisdictionOpen Years
Australia2018-2021
Japan2017-2021
Republic of Korea2018-2022
Switzerland2018-2021
United States2019-2021