Income Tax

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Tax

Income Tax

The components of income tax expense for the three and six months ended June 30, 2021 and 2020, respectively, consisted of the following:

	Three months ended June 30,				Six months ended June 30,
(In thousands)	2021		2020		2021		2020
Current tax provision	$	2,689	$	4,654	$	8,287	$	10,252
Deferred tax benefit	(57)		(134)		(947)		(1,214)
Income tax expense	$	2,632	$	4,520	$	7,340	$	9,038

The Company conducts operations in Puerto Rico, the United States, and certain countries in Latin America. As a result, the income tax expense includes the effect of taxes paid to the government of Puerto Rico as well as foreign jurisdictions. The following table presents the components of income tax expense for the three and six months ended June 30, 2021 and 2020, and its segregation based on location of operations:

	Three months ended June 30,				Six months ended June 30,
(In thousands)	2021		2020		2021		2020
Current tax (benefit) provision
Puerto Rico	$	(569)	$	1,528	$	1,035	$	3,207
United States	45		139		75		294
Foreign countries	3,213		2,987		7,177		6,751
Total current tax provision	$	2,689	$	4,654	$	8,287	$	10,252
Deferred tax (benefit) provision
Puerto Rico	$	(226)	$	(458)	$	(520)	$	(546)
United States	242		1,126		(187)		1,101
Foreign countries	(73)		(802)		(240)		(1,769)
Total deferred tax benefit	$	(57)	$	(134)	$	(947)	$	(1,214)

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, 2021, the Company has $89.1 million of unremitted earnings from foreign subsidiaries, compared to $80.2 million as of December 31, 2020. 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, 2021, the gross deferred tax asset amounted to $21.1 million and the gross deferred tax liability amounted to $16.4 million, compared to $22.0 million and $19.0 million, respectively, as of December 31, 2020. As of June 30, 2021, there is a valuation allowance against the gross deferred tax asset of approximately $1.1 million.

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)	2021		2020
Computed income tax at statutory rates	$	34,513	$	17,602
Differences in tax rates due to multiple jurisdictions	960		1,149
Effect of income subject to tax-exemption grant	(23,863)		(12,050)
Unrecognized tax (benefit) expense	(3,580)		193
Excess tax benefits on share-based compensation	(976)		—
Other, net	286		2,144
Income tax expense	$	7,340	$	9,038