INCOME TAXES

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Income Before Provision for Income Taxes

Income before provision for income taxes based on geographic location is disclosed in the table below:

	For the Years Ended December 31,
	2021		2020		2019
Income before provision for income taxes:
United States	$	128,498	$	100,411	$	65,370
Foreign	404,894		278,068		234,156
Total	$	533,392	$	378,479	$	299,526

Provision for Income Taxes

The provision for income taxes consists of the following:

	For the Years Ended December 31,
	2021		2020		2019
Current
Federal	$	22,742	$	19,249	$	16,943
State	6,735		7,022		3,610
Foreign	69,162		45,042		25,680
Deferred
Federal	(40,421)		(16,235)		(9,425)
State	(2,576)		(1,682)		(358)
Foreign	(3,902)		(2,077)		2,019
Total	$	51,740	$	51,319	$	38,469

As part of the U.S. Tax Act, as determined as of December 31, 2017, the Company was required to make annual installment payments for the one-time transition tax on accumulated foreign subsidiary earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets and 8.0% on the remaining earnings. As of December 31, 2021, the remaining unpaid balance of this one-time transition tax was $37.2 million to be paid in annual installments with the final payment due in 2025.

As of December 31, 2021, the Company had approximately $1,239.1 million of accumulated undistributed foreign earnings that are expected to be indefinitely reinvested. Due to the enactment of the U.S. Tax Act and the one-time transition tax on accumulated foreign subsidiary earnings, these accumulated foreign earnings are no longer expected to be subject to U.S. federal income tax if repatriated but could be subject to state and foreign income and withholding taxes.

Effective Tax Rate Reconciliation

The reconciliation of the provision for income taxes at the federal statutory income tax rate to the Company’s effective income tax rate is as follows:

	For the Years Ended December 31,
	2021		2020		2019
Provision for income taxes at federal statutory rate	$	112,016	$	79,481	$	62,898
Increase/(decrease) in taxes resulting from:
GILTI and BEAT U.S. taxes	229		191		(926)
Excess tax benefits relating to stock-based compensation	(71,628)		(36,646)		(28,385)
Foreign tax expense and tax rate differential	(206)		(387)		(1,402)
Effect of permanent differences	4,756		3,507		3,264
State taxes, net of federal benefit	9,192		5,323		2,971
Stock-based compensation expense	1,102		44		571
Tax credits	(4,100)		—		—
Other	379		(194)		(522)
Provision for income taxes	$	51,740	$	51,319	$	38,469

The Company’s worldwide effective tax rate for the years ended December 31, 2021, 2020 and 2019 was 9.7%, 13.6% and 12.8%, respectively. The provision for income taxes in the year ended December 31, 2021 was favorably impacted by the recognition of $4.1 million of certain tax credits, of which $2.7 million were a one-time benefit resulting from credit claims for previous tax periods. In addition, the Company recorded excess tax benefits upon vesting or exercise of stock-based awards of $71.6 million, $36.6 million and $28.4 million during the years ended December 31, 2021, 2020 and 2019, respectively.

In Belarus, member technology companies of High-Technologies Park, including the Company’s local subsidiary, have a full exemption from Belarus income tax on qualifying income through January 2049. However, beginning February 1, 2018, the earnings of the Company’s Belarus local subsidiary became subject to U. S. income taxation due to the Company’s decision to change the tax status of the subsidiary. There was no aggregate dollar benefit derived or impact on diluted net income per share from this tax holiday for the years ended December 31, 2021, 2020 and 2019.

Deferred Income Taxes

Deferred income taxes reflect the net 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 are as follows:

	As of December 31, 2021		As of December 31, 2020
Deferred tax assets:
Property and equipment	$	10,561	$	8,164
Intangible assets	2,220		827
Accrued expenses	90,754		50,639
Net operating loss carryforward	4,988		6,089
Deferred revenue	4,551		9,796
Stock-based compensation	31,959		30,112
Operating lease liabilities	52,806		51,519
Foreign tax credit	7,589		2,168
Foreign currency exchange	11,750		4,890
Other assets	2,235		1,252
Deferred tax assets	$	219,413	$	165,456
Less: valuation allowance	(4,538)		(5,485)
Total deferred tax assets	$	214,875	$	159,971
Deferred tax liabilities:
Property and equipment	$	1,095	$	3,818
Intangible assets	26,124		12,018
Operating lease right-of-use assets	51,871		50,149
Accrued revenue and expenses	2,953		991
U.S. taxation of foreign subsidiaries	3,770		1,608
Foreign currency exchange	239		1,153
Other liabilities	3,210		1,095
Total deferred tax liabilities	$	89,262	$	70,832
Net deferred tax assets	$	125,613	$	89,139

As of December 31, 2021 and 2020, the Company classified $18.3 million and $3.3 million, respectively, of deferred tax liabilities as Other noncurrent liabilities in the consolidated balance sheets.

Included in the stock-based compensation expense deferred tax asset at December 31, 2021 and 2020 is $5.4 million and $6.1 million, respectively, that is related to acquisitions and is amortized for tax purposes over a 10 to 15-year period.

As of December 31, 2021, the Company’s domestic and foreign net operating loss (“NOL”) carryforwards for income tax purposes were approximately $2.8 million and $18.9 million, respectively. If not utilized, the domestic NOL carryforwards will begin to expire in 2022. The foreign NOL carryforwards include $9.7 million from jurisdictions with no expiration date, with the remainder expiring as follows: $1.2 million in 2022, $1.3 million in 2023, $2.0 million in 2024, $3.0 million in 2025, and $1.7 million in 2026. The Company maintains a valuation allowance primarily related to the net operating loss carryforwards in certain foreign jurisdictions that the Company believes are not likely to be realized, which totaled $17.5 million as of December 31, 2021.

Unrecognized Tax Benefits

As of December 31, 2021 and 2020, unrecognized tax benefits of $8.2 million and $3.3 million, respectively, are included in Income taxes payable, noncurrent within the consolidated balance sheets. During the year ended December 31, 2021, uncertain tax positions resulted in an unrecognized tax benefit of $5.3 million related to 2021 and $0.9 million for prior years including interest and penalties, and reversals related to prior year tax positions yielded a tax benefit of $1.3 million including reversal of interest and penalties. During the year ended December 31, 2020, a new uncertain tax position resulted in an unrecognized tax benefit of $0.8 million, and reversals related to prior year tax positions yielded a tax benefit of $0.5 million. There were no significant new tax positions that resulted in unrecognized tax benefits or reversals related to prior year tax positions during the year ended December 31, 2019. There were no tax positions for which it was reasonably possible that unrecognized tax benefits will significantly increase or decrease within twelve months of the reporting date.

The Company is subject to taxation in the United States and various states and foreign jurisdictions including Russia, Germany, Ukraine, the United Kingdom, Hungary, Switzerland, Netherlands, Poland and India. With few exceptions, as of December 31, 2021, the Company is no longer subject to U.S. federal, state, local or foreign examinations by tax authorities for years before 2017.