H. Income Tax

Effective Tax Rate

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2017			2016			2017			2016
	(Dollars in millions)
Provision (benefit) for income taxes	$	(1	)	$	11		$	16		$	6
Effective tax rate		(1	)%		20	%		11	%		12	%

During the three and six months ended March 31, 2017, the Company recorded a tax provision (benefit) of $(1) million and $16 million, respectively, resulting in effective tax rates of (1)% and 11%, respectively. For both the three and six months ended March 31, 2017, these amounts included a net discrete tax benefit of $20 million, primarily comprised of a tax benefit associated with the generation of excess foreign tax credits upon repatriation of previously taxed foreign earnings. During the three and six months ended March 31, 2016, the Company recorded tax provisions of $11 million and $6 million, respectively, resulting in effective tax rates of 20% and 12%, respectively. For both the three and six months ended March 31, 2016, these amounts included a net discrete tax expense of $1 million and a net discrete tax benefit of $5 million, respectively, primarily comprised of the net tax benefit from certain foreign exchange gains and losses, the renewal of the U.S. Research and Experimentation credit and releases of reserves for uncertain tax positions.

Uncertainties

Cabot and certain subsidiaries are under audit in a number of jurisdictions. In addition, certain statutes of limitations are scheduled to expire in the near future. It is reasonably possible that a further change in the unrecognized tax benefits may also occur within the next twelve months related to the settlement of one or more of these audits or the lapse of applicable statutes of limitations. However, an estimated range of the impact on the unrecognized tax benefits cannot be quantified at this time.

Cabot files U.S. federal and state and non-U.S. income tax returns in jurisdictions with varying statutes of limitations. The 2012 through 2014 tax years generally remain subject to examination by the United States Internal Revenue Service and various tax years from 2005 through 2014 remain subject to examination by the respective state tax authorities. In significant non-U.S. jurisdictions, various tax years from 2002 through 2015 remain subject to examination by their respective tax authorities. As of March 31, 2017, Cabot’s significant non-U.S. jurisdictions include Canada, China, France, Germany, Italy, Japan, and the Netherlands.

During the three and six months ended March 31, 2017, Cabot released uncertain tax positions of $1 million and $3 million, respectively, due to the expirations of statutes of limitations in various jurisdictions. During the three and six months ended March 31, 2016, Cabot released uncertain tax positions of $1 million and $3 million, respectively, due to the expirations of statutes of limitations in various jurisdictions.