Income Tax

The components of income tax expense for the three and six months ended June 30, 2018 and 2017, respectively, consisted of the following:



	Three months ended June 30,					Six months ended June 30,
(In thousands)	2018		2017			2018			2017
Current tax provision	$	3,073	$	4,380		$	8,160		$	7,887
Deferred tax expense (benefit)	39		(312		)	(1,113		)	(1,799		)
Income tax expense	$	3,112	$	4,068		$	7,047		$	6,088

The Company conducts operations in Puerto Rico and certain countries in Latin America. As a result, the income tax expense includes the effect of taxes paid to the Puerto Rico government as well as foreign jurisdictions. The following table presents the components of income tax expense for the three and six months ended June 30, 2018 and 2017, respectively, and its segregation based on location of operations:



	Three months ended June 30,						Six months ended June 30,
(In thousands)	2018			2017			2018			2017
Current tax provision
Puerto Rico	$	1,456		$	3,054		$	3,855		$	4,860
United States	93			386			173			200
Foreign countries	1,524			940			4,132			2,827
Total current tax provision	$	3,073		$	4,380		$	8,160		$	7,887
Deferred tax expense (benefit)
Puerto Rico	$	(194	)	$	(463	)	$	(1,033	)	$	(1,052	)
United States	(11		)	20			(98		)	(83		)
Foreign countries	244			131			18			(664		)
Total deferred tax expense (benefit)	$	39		$	(312	)	$	(1,113	)	$	(1,799	)

Taxes payable to foreign countries by EVERTEC’s subsidiaries will be paid by such subsidiary and the corresponding liability and expense will be presented in EVERTEC’s consolidated financial statements.

As of June 30, 2018, the Company has $36.4 million of unremitted earnings from foreign subsidiaries. The Company has not recognized a deferred tax liability on undistributed earnings for the Company’s foreign subsidiaries because these earnings are intended to be indefinitely reinvested.

As of June 30, 2018, the gross deferred tax asset amounted to $8.2 million and the gross deferred tax liability amounted to $20.1 million, compared to $8.3 million and $21.1 million, respectively, as of December 31, 2017.

Income tax expense differs from the amount computed by applying the Puerto Rico statutory income tax rate to the income before income taxes as a result of the following:



	Six months ended June 30,
(In thousands)	2018			2017
Computed income tax at statutory rates	$	19,614		$	19,281
Differences in tax rates due to multiple jurisdictions	(201		)	(466		)
Tax benefit due to a change in estimate	—			(334		)
Effect of income subject to tax-exemption grant	(12,902		)	(12,580		)
Unrecognized tax benefit	556			187
Other benefit	(20		)	—
Income tax expense	$	7,047		$	6,088