INCOME TAXES

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

During the three months ended September 30, 2024, the Company recognized income tax expense of $11 million on income of $99 million, an effective tax rate of 11.1%, as compared to income tax expense of $30 million on income of $149 million, an effective tax rate of 20.0%, for the three months ended September 30, 2023. The lower effective tax rate for the three months ended September 30, 2024 when compared with the three months ended September 30, 2023 is primarily due to an increase in favorable discrete items, partially offset by higher tax related to geographic distribution of income.

During the nine months ended September 30, 2024, the Company recognized income tax expense of $73 million on income of $410 million, an effective tax rate of 17.8%, as compared to income tax expense of $85 million on income of $474 million, an effective tax rate of 18.0%, for the nine months ended September 30, 2023. The lower effective tax rate for the nine months ended September 30, 2024 when compared with the nine months ended September 30, 2023 is primarily due to an increase in favorable discrete items.

On December 15, 2022, the European Union (“EU”) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15% for large corporations, as established by the Organization for Economic Co-operation and Development (“OECD”) Pillar Two Framework. A number of countries in which we operate have adopted legislation, many of which are effective in 2024 subject to the OECD transitional safe harbor rules, while other countries are still in the process of introducing legislation. In addition, the OECD continues to issue guidance on this matter. The Company has determined the impact of enacted Pillar Two legislation on its financial statements is not material. The Company will continue to evaluate the financial statement impacts as additional Pillar Two rules are enacted and OECD guidance is issued.