Income Taxes (Notes)

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

INCOME TAXES

The Company’s provision for income taxes is based on the estimated annual effective tax rate, plus discrete items. The effective tax rates for the three and six months ended June 30, 2021 were 45% and 42%, respectively. The effective tax rates for the three and six months ended June 30, 2020 were 108% and 48%, respectively. The difference between the Company’s effective tax rates for the 2021 and 2020 periods and the U.S. statutory tax rate of 21% related primarily to U.S. taxes on foreign earnings, foreign tax rate differentials, the impacts of foreign currency fluctuations at certain foreign subsidiaries, nondeductible expenses, and valuation allowance.

The Company recognized discrete tax expense in 2021 resulting from several transactions. For the three and six months ended June 30, 2021, the Company recorded discrete tax expense of approximately $39 million and $46 million, respectively, due to the formation of AES Clean Energy Development. Additionally, the issuance of new shares by Fluence resulted in approximately $13 million of discrete tax expense for the three and six months ended June 30, 2021.

For the six months ended June 30, 2020, the Company recognized approximately $13 million of discrete tax benefit from the impact of foreign currency devaluation in Mexico.

The Company recognized discrete tax expense of approximately $13 million and $21 million, as a result of incremental capitalized interest in Chile for the three and six months ended June 30, 2020, respectively. Additionally, the Company recognized discrete tax expense of approximately $25 million as a result of incremental deferred taxes relating to DPL for the three and six months ended June 30, 2020.