Income from continuing operations, before taxes for the years ended December 31 was as follows:


	2021		2020		2019
United States	$	19.3	$	(89.6)	$	(108.3)
Foreign	(178.1)		(214.0)		246.7
Total	$	(158.8)	$	(303.6)	$	138.4

The provision for income taxes for the years ended December 31 was as follows:


	2021		2020		2019
Federal:
Current	$	.2	$	(9.5)	$	(9.0)
Deferred	—		8.9		8.5
Total Federal	.2		(.6)		(0.5)
Foreign:
Current	35.5		31.4		79.0
Deferred	(20.0)		2.6		28.9
Total Foreign	15.5		34.0		107.9
State and Local:
Current	.5		.6		(4.3)
Deferred	—		—		—
Total State and other	.5		.6		(4.3)
Total	$	16.2	$	34.0	$	103.1

The continuing operations effective tax rate for the years ended December 31 was as follows:


	2021		2020		2019
Statutory federal rate	21.0	%	21.0	%	21.0	%
State and local taxes, net of federal tax benefit	(.3)		(.2)		(2.7)
Tax on foreign income	67.1		(1.8)		62.1
Tax on uncertain tax positions	3.7		1.1		16.6
Reorganizations	—		(10.0)		185.6
Net change in valuation allowances	(103.1)		(21.4)		(208.0)
Other	1.4		.1		(.1)
Effective tax rate	(10.2)	%	(11.2)	%	74.5	%

In 2021, the Company’s effective tax rate continues to be impacted by the country mix of earnings. The country mix includes losses in certain jurisdictions that cannot be benefited and income tax expense in certain jurisdictions where taxable income is generated. In 2021, the Company adjusted its reserves for uncertain tax positions associated with current year activity and events, primarily due to the expiration of statutes of limitation. Included in Tax on Foreign Income is the effect of tax rate changes including the increase in the United Kingdom tax rate from 19% to 25% which resulted in a deferred tax benefit of $89.

In 2021, the Net Change in Valuation Allowances line in the rate reconciliation above includes $164 of net benefits that could not be recognized. The $164 of benefits which were not recognized consisted of the following key items: 1) $71 of increased Valuation Allowances due to additional Deferred Tax Assets generated during 2021 which cannot be benefitted; 2) $89 of increased Valuation Allowances on Deferred Tax Assets due to a tax rate change offsetting equivalent and associated accruals of deferred tax benefits reflected in the “Tax on Foreign Income” line above; and 3) $4 of increased Valuation Allowances due to changes in judgment regarding the ability to use certain Deferred Tax Assets which existed at the beginning of 2021.

In 2020, the Company’s effective tax rate continues to be impacted by the country mix of earnings. The country mix includes losses in certain jurisdictions that cannot be benefited and income tax expense in certain jurisdictions where taxable income is generated. In 2020, the Company adjusted its reserves for uncertain tax positions associated with current year activity and events, primarily due to the expiration of statutes of limitation. Included in Tax on Foreign Income is the effect of tax rate changes including the increase in the United Kingdom tax rate from 17% to 19% which resulted in a deferred tax benefit of $21.0. Included in the Re-organizations line is the effect of a true-up for a change in estimate of $30.5 regarding the amount of net operating losses generated as part of the 2018 restructuring transactions.

In 2020, the Net Change in Valuation Allowances line in the rate reconciliation above includes $65.1 of net benefits that could not be recognized. The $65.1 of benefits which were not recognized consisted of the following key items: 1) $69.9 of increased Valuation Allowances due to additional Deferred Tax Assets generated during 2020 which cannot be benefitted; 2) $21.0 of increased Valuation Allowances on Deferred Tax Assets due to a tax rate change offsetting equivalent and associated accruals of deferred tax benefits reflected in the “Tax on Foreign Income” line above; 3) $4.7 of increased Valuation Allowances due to changes in judgment regarding the ability to use certain Deferred Tax Assets which existed at the beginning of 2020; and 4) $30.5 decrease which offsets the true-up effect for the change in estimate of the benefit of net operating losses generated as part of the 2018 restructuring transactions.

In 2019, as a result of continued business model changes related to the move of the Company’s headquarters from the US to the UK, the Company recognized one-time tax charges of $256.9 reflected in the "Reorganizations" line above associated primarily with the rationalization and re-alignment of the Company’s legal entity structure which resulted in the use of approximately $256.9 of Foreign Tax Credits, deferred tax assets and other tax attributes.

In 2019, the Net Change in Valuation Allowances line in the rate reconciliation above includes: 1) $232.5 of decreases to the Valuation Allowances primarily associated with the utilization of Foreign Tax Credits and deferred tax assets offsetting the one-time tax charges of $256.9 noted in the "Reorganizations" line above; and 2) $66.5 of decreases due to a tax rate change offsetting equivalent and associated write-offs of deferred tax assets reflected in the “Tax on Foreign Income” line above.


	2021		2020
Deferred tax assets:
Tax loss and deduction carryforwards	$	425.0	$	1,997.5
Intangibles	218.5		188.3
Tax credit carryforwards	119.7		119.0
Interest carryforwards	76.3		48.3
All other future deductions	199.8		199.1
Valuation allowance	(815.4)		(2,327.6)
Total deferred tax assets	223.9		224.6
Deferred tax liabilities	$	(105.0)	$	(90.8)
Net deferred tax assets	$	118.9	$	133.8

As of December 31, 2021, excluded from the above table are approximately $1,638 of deferred tax assets for Avon Luxembourg Holdings S.à r.l. and subsidiaries that previously were offset with a full valuation allowance. As discussed in Note 3. Discontinued Operations and Assets and Liabilities Held for Sale, Avon Luxembourg Holdings S.à r.l. and subsidiaries were divested as of July 1, 2021.

We monitor the realizability of our deferred tax assets on a continuous basis. Should macroeconomic and socio-political conditions change or our business operations do not improve, approximately $67 of deferred tax assets could potentially need to be offset with the recording of a valuation allowance during the next 12 months. The deferred tax assets are associated with Avon subsidiary operations that suffered a loss in earnings before tax during 2021.

As of December 31, 2020, excluded from the above table are approximately $635 of worthless deferred tax assets that previously were offset with a full valuation allowance. Approximately $465 of these deferred tax assets cannot be used due to change of control limitation resulting from the merger with Natura. The remaining $170 is primarily associated with U.S. foreign tax credits of $70 and state net operating/capital losses of $100 which the Company has determined that use of such deferred tax assets would be remote.

Deferred tax assets (liabilities) at December 31 were classified as follows:


	2021		2020
Deferred tax assets:

Other assets	$	121.4	$	135.8
Total deferred tax assets	121.4		135.8
Deferred tax liabilities:

Long-term income taxes	$	(2.5)	$	(2.0)
Total deferred tax liabilities	(2.5)		(2.0)
Net deferred tax assets	$	118.9	$	133.8

The Company continuously assesses available positive and negative evidence to estimate whether sufficient future taxable income will be generated to utilize our existing deferred tax assets that are not subject to a valuation allowance. As of December 31, 2021, the COVID-19 pandemic is negative evidence the Company must consider. As of December 31, 2021, the increase in negative evidence due to COVID-19, primarily lower revenue and profit performance, resulted in approximately $8 of valuation allowances being recorded against deferred tax assets. The Company will continue to monitor the COVID-19 pandemic and other effects that could impact the conclusions regarding the realizability of its remaining deferred tax assets. Potential negative evidence, including such things as the worsening of the economies in the markets we operate in and reduced profitability of our markets could give rise to a need for a valuation allowance to reduce our deferred tax assets in upcoming quarters.

During 2021, excluding the reductions associated with the divested deferred tax assets noted above, the Company recorded a net increase in its valuation allowances of $126. The $126 of benefits primarily relates to current year losses that could not be benefitted and the effects of currency translation.

During 2020, excluding the reductions associated with the worthless deferred tax assets noted above, the Company recorded a net increase in its valuation allowances of $2.6. The $2.6 includes the effect of $65.1 of benefits related to operations and other activity which could not be recognized as noted in the rate reconciliation above offset with the write-off of $81.8 of Valuation Allowance associated with Deferred Tax Assets which can no longer be utilized due to change of control restrictions resulting from the Natura merger and $19.4 of increases primarily driven by currency translation and other miscellaneous effects.

At December 31, 2021, the valuation allowance primarily represents amounts for certain foreign tax loss carryforwards, substantially all U.S. deferred tax assets and certain other foreign deferred tax assets. The recognition of deferred tax assets was based on the evaluation of current and estimated future profitability of the operations, reversal of deferred tax liabilities and the likelihood of utilizing tax credit and/or loss carryforwards. Tax planning strategies were also considered and evaluated as support for the realization of deferred tax assets. Where these sources of income existed along with sufficient positive evidence that indicated it was more likely than not that such sources of income could be relied upon, then the deferred tax assets were not reduced by a valuation allowance.

At December 31, 2021, we had recognized deferred tax assets of $119.7 relating to tax credit carryforwards (U.S. foreign tax credits, research and experimentation credits and other tax credits) for which a valuation allowance of $119.7 has been provided. The tax credit carryforwards consist of U.S. foreign tax credits of $87.6 which are subject to expiration between 2022 and 2027; U.S. research and experimentation credits of $23.7 which are subject to expiration between 2027 and 2042 and other tax credits of $8.4 which are subject to expiration between 2022 and 2033.

At December 31, 2021, we had recognized deferred tax assets of $393.7 relating to foreign loss carryforwards for which a valuation allowance of $322.4 has been provided and for which $22.4 has also been offset in accordance with ASU2013-11. At December 31, 2021, we had recognized deferred tax assets of $31.4 relating to federal loss carryforwards for which a valuation allowance of $31.4 has been provided

At December 31, 2021 we had foreign tax loss carryforwards of $2,599.0, of which $1,059.2 are not subject to expiration and $1,539.8 are subject to expiration between 2022 and 2051. At December 31, 2021, we had federal tax loss carryforwards of $149.3 which are not subject to expiration.

At December 31, 2021, we continue to assert that substantially all of our foreign earnings are indefinitely reinvested. At December 31, 2021 the company’s undistributed foreign earnings of approximately $1.2 billion and would generate an approximate $7.9 of income tax if repatriated from the local subsidiaries.



Balance at December 31, 2018	137.6
Additions based on tax positions related to the current year	13.3
Additions for tax positions of prior years	186.6
Reductions for tax positions of prior years	(3.0)
Reductions due to lapse of statute of limitations	(.6)
Reductions due to settlements with tax authorities	(2.2)
Balance at December 31, 2019	331.7
Additions based on tax positions related to the current year	90.6
Additions for tax positions of prior years	.6
Reductions for tax positions of prior years	(34.1)
Reductions due to lapse of statute of limitations	(16.5)
Reductions due to settlements with tax authorities	(.2)
Balance at December 31, 2020	372.1
Additions based on tax positions related to the current year	6.8
Additions for tax positions of prior years	24.1
Reductions for tax positions of prior years	(136.8)
Reductions due to lapse of statute of limitations	(11.2)
Reductions due to settlements with tax authorities	(3.3)
Balance at December 31, 2021	$	251.7

We accrue interest and penalties related to unrecognized tax benefits in the provision for income taxes. We accrued interest and penalties, net of taxes of $0.5 and $1.0, for the years ended December 31, 2021 and 2020, respectively, and reversed previously recorded expenses for interest and penalties, net of tax of $1.0 for the year ended December 31, 2019.

At December 31, 2021 and 2020 we had $7.1 and $6.8, respectively, recorded for interest and penalties, net of tax benefit. The unrecognized tax benefits, including interest and penalties, were classified within long-term income taxes in our Consolidated Balance Sheets.

We file income tax returns in the U.S. and foreign jurisdictions. As of December 31, 2021, the tax years that remained subject to examination by major tax jurisdiction for our most significant subsidiaries were as follows: