Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We are subject to income taxation through certain of our subsidiaries primarily in the United States, South Korea and throughout other Asian countries.

The components of income tax (benefit) expense were as follows:

(in thousands of US dollars)	2022		2021		2020
Current taxes
United States	$	3	$	2	$	1
Foreign - Korea	37,474		5		—
Foreign - Other	1,922		995		291
Current taxes	39,399		1,002		292
Deferred taxes
United States	(40,462)		—		—
Foreign - Korea	—		—		—
Foreign - Other	—		—		—
Deferred taxes	(40,462)		—		—
Income tax (benefit) expense	$	(1,063)	$	1,002	$	292

The components of loss before income taxes are as follows:

(in thousands of US dollars)	2022		2021		2020
United States	$	(232,278)	$	(296,529)	$	(8,771)
Foreign - Korea	185,809		(1,226,675)		(455,683)
Foreign - Other	(46,636)		(18,384)		1,589
Loss before income taxes	$	(93,105)	$	(1,541,588)	$	(462,865)

Differences between the provision at the federal statutory rate and the provision recorded at the consolidated level are as follows:

(in thousands of US dollars)	2022		2021		2020
Taxes computed at the federal statutory rate	$	(19,552)	$	(323,770)	$	(99,667)
Differences resulting from:
Statutory rate difference	51,114		(43,633)		(14,192)
Change in valuation allowances	(143,831)		393,483		118,253
Global intangible low taxed income tax ("GILTI")	93,097		—		—
Stock compensation	36,992		(20,428)		—
Tax credit	(34,952)		(5,214)		—
Other nondeductible expense	15,157		260		(3,994)
Other	912		304		(108)
Income tax (benefit) expense	$	(1,063)	$	1,002	$	292

Our resulting effective tax rate differs from the applicable statutory rate primarily due to the statutory rate change, changes in the valuation allowance against our deferred tax assets, impacts from GILTI and equity-based compensation.

The income tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities were as follows:

(in thousands of US dollars)	December 31, 2022		December 31, 2021
Deferred tax assets
Provision and allowances	$	57,434	$	43,156
Depreciation	6,847		5,212
Accrued expenses	51,922		43,223
Amortization	32,166		49,529
Defined severance benefits	70,628		68,421
Lease liabilities	352,732		361,420
Net operating loss carryforwards	789,856		1,019,583
Tax credits	55,444		23,066
Other	28,513		6,795
Total deferred tax assets	1,445,542		1,620,405
Less: valuation allowances	(1,085,154)		(1,284,380)
Total deferred tax assets net of valuation allowance	$	360,388	$	336,025
Deferred tax liabilities
Prepaid expenses	$	(696)	$	(88)
Accrued income	(1,693)		(1,745)
Lease asset	(317,286)		(333,965)
Loan payable	(250)		(89)
Other	(1)		(138)
Total deferred liabilities	(319,926)		(336,025)
Net deferred tax assets/(liabilities)	$	40,462	$	—

Our valuation allowances were $1.1 billion and $1.3 billion as of December 31, 2022 and 2021, respectively. The valuation allowances at December 31, 2022 were primarily related to net operating loss carryforwards that, in the judgment of management, are not more likely than not to be realized. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the

Company will realize the benefits of these deductible differences, net of the existing valuation allowances at December 31, 2022. Changes in the valuation allowances, mainly due to net operating loss carryforwards, were as follows:

(in thousands)	2022		2021		2020
Beginning balance, January 1	$	(1,284,380)	$	(975,187)	$	(721,809)
Changes to existing valuation allowances	103,005		(393,430)		(118,144)
Derecognition of valuation allowances	40,462		—		—
Changes in foreign exchange rates, statutory rates and other	55,759		84,237		(135,234)
Ending balance, December 31	$	(1,085,154)	$	(1,284,380)	$	(975,187)

As of December 31, 2022, we have net operating loss carryforwards for corporate income tax purposes of $3.4 billion, substantially all in Korea, which are available to offset future corporate taxable income, if any. The net operating loss carryforwards in Korea expire as follows:

(in thousands)	Korea
2025	$	278,813
2026	418,051
2027	518,509
2028	830,812
2029	332,525
2035 - 2037	942,168
Total net operating loss carryforwards	$	3,320,878

We have corporate tax credit carryforwards of $50.9 million in the US which are available to reduce future corporate regular income taxes and $37.5 million of which expires between 2034 and 2042.

We did not have any material uncertain tax positions as of December 31, 2022 and 2021.

The open tax years for our major tax jurisdictions are 2018 - 2022 for the United States and 2017 - 2022 for Korea.