Huntsman Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

December 31,

Accrued liability for interest

Accrued liability for penalties

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax

Schedule of income tax expense (benefit)

The following is a summary of U.S. and non-U.S. provisions for current and deferred income taxes (dollars in millions):

Huntsman Corporation


	Year ended December 31,
	2019		2018		2017
Income tax (benefit) expense:
U.S.
Current	$	(17)	$	57	$	23
Deferred		(181)		(30)		(133)
Non-U.S.
Current		71		153		88
Deferred		89		(135)		42
Total	$	(38)	$	45	$	20

Schedule of reconciliation of the differences between the U.S. federal income taxes at the U.S. statutory rate to total provision for income taxes

The following schedule reconciles the differences between the U.S. federal income taxes at the U.S. statutory rate to our provision for income taxes (dollars in millions):

Huntsman Corporation


	Year ended December 31,
	2019		2018		2017
Income from continuing operations before income taxes	$	391	$	734	$	531
Expected tax expense at U.S. statutory rate of 21%, 21% and 35%, respectively	$	82	$	154	$	186
Change resulting from:
State tax expense net of federal benefit		(3)		(1)		(2)
Non-U.S. tax rate differentials		9		27		(67)
U.S. Tax Reform Act impact		(1)		32		(52)
Currency exchange gains/losses(net)		(5)		(10)		15
Venator investment basis difference and fair market value adjustments		(199)		18		—
Tax losses related to Venator investment		(18)		—		—
Non-U.S. income subject to U.S. tax not offset by U.S. foreign tax credits		7		16		—
Tax authority audits and dispute resolutions		(6)		5		9
Share-based compensation excess tax benefits		(4)		(14)		(10)
Change in valuation allowance		56		(185)		(72)
Deferred tax effects of non-U.S. tax rate changes		36		(2)		4
Impact of equity method investments		(13)		(14)		(3)
Other non-U.S. tax effects, including nondeductible expenses transfer pricing adjustments and various withholding taxes		19		19		3
Other U.S. tax effects, including nondeductible expenses and other credits		2		—		9
Total income tax (benefit) expense	$	(38)	$	45	$	20

Schedule of components of income (loss) from continuing operations before income taxes

The components of income (loss) from continuing operations before income taxes were as follows (dollars in millions):

Huntsman Corporation


	Year ended December 31,
	2019		2018		2017
U.S.	$	(106)	$	(38)	$	(143)
Non-U.S.		497		772		674
Total	$	391	$	734	$	531

Schedule of components of deferred income tax assets and liabilities

Components of deferred income tax assets and liabilities were as follows (dollars in millions):

Huntsman Corporation


	December 31,
	2019		2018
Deferred income tax assets:
Net operating loss carryforwards	$	281	$	359
Pension and other employee compensation		172		180
Property, plant and equipment		15		15
Intangible assets		56		76
Basis difference in Venator investment		199		—
Operating leases		98		—
Other, net		72		50
Total	$	893	$	680
Deferred income tax liabilities:
Property, plant and equipment	$	(218)	$	(199)
Pension and other employee compensation		(1)		—
Intangible assets		(27)		(33)
Unrealized currency gains		(43)		(37)
Operating leases		(102)		—
Other, net		(8)		(9)
Total	$	(399)	$	(278)
Net deferred tax asset before valuation allowance	$	494	$	402
Valuation allowance—net operating losses and other		(231)		(215)
Net deferred tax asset	$	263	$	187
Non-current deferred tax asset		292		324
Non-current deferred tax liability		(29)		(137)
Net deferred tax asset	$	263	$	187

Schedule of changes in valuation allowance

The following is a summary of changes in the valuation allowance (dollars in millions):

Huntsman Corporation


	2019		2018		2017
Valuation allowance as of January 1	$	215	$	412	$	484
Valuation allowance as of December 31		231		215		412
Net (increase) decrease		(16)		197		72
Foreign currency movements		—		3		11
(Decrease) increase to deferred tax assets with no impact on operating tax expense, including an offsetting (decrease) increase to valuation allowances		(40)		(15)		(11)
Change in valuation allowance per rate reconciliation	$	(56)	$	185	$	72
Components of change in valuation allowance affecting tax expense:
Pre-tax income and losses in jurisdictions with valuation allowances resulting in no tax expense or benefit	$	(133)	$	53	$	50
Releases of valuation allowances in various jurisdictions		—		132		22
Establishments of valuation allowances in various jurisdictions		77		—		—
Change in valuation allowance per rate reconciliation	$	(56)	$	185	$	72

Schedule of reconciliation of unrecognized tax benefits

The following is a reconciliation of our unrecognized tax benefits (dollars in millions):


	2019		2018
Unrecognized tax benefits as of January 1	$	26	$	23
Gross increases and decreases—tax positions taken during a prior period		4		1
Gross increases and decreases—tax positions taken during the current period		1		3
Decreases related to settlements of amounts due to tax authorities		—		—
Reductions resulting from the lapse of statutes of limitation		(4)		—
Foreign currency movements		1		(1)
Unrecognized tax benefits as of December 31	$	28	$	26

Schedule of interest and penalties accrued related to unrecognized tax benefits included in the income tax expense


	Year ended December 31,
	2019		2018		2017
Interest expense included in tax expense	$	2	$	—	$	—
Penalties expense included in tax expense		2		—		—

Summary of the tax years that remain subject to examination by major tax jurisdictions


Tax Jurisdiction		Open Tax Years
Belgium		2017 and later
China		2009 and later
Germany		2014 and later
Hong Kong		2013 and later
India		2004 and later
Italy		2015 and later
Mexico		2014 and later
Switzerland		2013 and later
The Netherlands		2016 and later
Thailand		2012 and later
United Kingdom		2017 and later
United States federal		2017 and later

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

Income Tax

Schedule of income tax expense (benefit)


	Year ended December 31,
	2019		2018		2017
Income tax (benefit) expense:
U.S.
Current	$	(21)	$	57	$	16
Deferred		(179)		(34)		(130)
Non-U.S.
Current		70		153		88
Deferred		89		(135)		43
Total	$	(41)	$	41	$	17

Schedule of reconciliation of the differences between the U.S. federal income taxes at the U.S. statutory rate to total provision for income taxes


	Year ended December 31,
	2019		2018		2017
Income from continuing operations before income taxes	$	377	$	716	$	524
Expected tax expense at U.S. statutory rate of 21%, 21% and 35%, respectively	$	79	$	150	$	183
Change resulting from:
State tax expense net of federal benefit		(3)		(1)		(2)
Non-U.S. tax rate differentials		9		27		(67)
U.S. Tax Reform Act impact		(1)		32		(53)
Currency exchange gains/losses(net)		(5)		(10)		15
Venator investment basis difference and fair market value adjustments		(199)		18		—
Tax losses related to Venator investment		(18)		—		—
Non-U.S. income subject to U.S. tax not offset by U.S. foreign tax credits		7		16		—
Tax authority audits and dispute resolutions		(6)		5		9
Share-based compensation excess tax benefits		(4)		(14)		(10)
Change in valuation allowance		56		(185)		(72)
Deferred tax effects of non-U.S. tax rate changes		36		(2)		4
Impact of equity method investments		(13)		(14)		(3)
Other non-U.S. tax effects, including nondeductible expenses transfer pricing adjustments and various withholding taxes		19		19		4
Other U.S. tax effects, including nondeductible expenses and other credits		2		—		9
Total income tax (benefit) expense	$	(41)	$	41	$	17

Schedule of components of income (loss) from continuing operations before income taxes


	Year ended December 31,
	2019		2018		2017
U.S.	$	(120)	$	(56)	$	(150)
Non-U.S.		497		772		674
Total	$	377	$	716	$	524

Schedule of components of deferred income tax assets and liabilities


	December 31,
	2019		2018
Deferred income tax assets:
Net operating loss carryforwards	$	281	$	359
Pension and other employee compensation		172		180
Property, plant and equipment		15		15
Intangible assets		56		76
Basis difference in Venator investment		199		—
Operating leases		98		—
Other, net		72		50
Total	$	893	$	680
Deferred income tax liabilities:
Property, plant and equipment	$	(218)	$	(199)
Pension and other employee compensation		(1)		—
Intangible assets		(27)		(33)
Unrealized currency gains		(43)		(37)
Operating leases		(102)		—
Other, net		(8)		(7)
Total	$	(399)	$	(276)
Net deferred tax asset before valuation allowance	$	494	$	404
Valuation allowance—net operating losses and other		(231)		(215)
Net deferred tax asset	$	263	$	189
Non-current deferred tax asset		292		324
Non-current deferred tax liability		(29)		(135)
Net deferred tax asset	$	263	$	189

Schedule of changes in valuation allowance


	2019		2018		2017
Valuation allowance as of January 1	$	215	$	412	$	487
Valuation allowance as of December 31		231		215		412
Net (increase) decrease		(16)		197		75
Foreign currency movements		—		3		11
(Decrease) increase to deferred tax assets with no impact on operating tax expense, including an offsetting (decrease) increase to valuation allowances		(40)		(15)		(14)
Change in valuation allowance per rate reconciliation	$	(56)	$	185	$	72
Components of change in valuation allowance affecting tax expense:
Pre-tax income and losses in jurisdictions with valuation allowances resulting in no tax expense or benefit	$	(133)	$	53	$	49
Releases of valuation allowances in various jurisdictions		—		132		23
Establishments of valuation allowances in various jurisdictions		77		—		—
Change in valuation allowance per rate reconciliation	$	(56)	$	185	$	72