Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

Income Taxes
6 Months Ended
Apr. 01, 2023
Income Taxes [Abstract]  
Income Taxes
Note K—Income Taxes
The Tax
Cuts and Jobs Act
of 2017 enacted on
December 22, 2017, significantly revised the
U.S. corporate income tax code
by, among
other things, lowering federal
corporate income tax rates, implementing a
modified territorial tax system and imposing a
repatriation tax ("transition tax") on deemed repatriated cumulative earnings
of foreign subsidiaries which will be paid
over eight years. In addition, new taxes
were imposed related to foreign income, including
a tax on global intangible low-taxed
income (“GILTI”) as well as a limitation on the
deduction for business interest expense
(“Section 163(j)"). GILTI is the excess of the shareholder’s
net controlled foreign
corporations net tested income over the
net deemed tangible income.
GILTI income is eligible for a deduction of up to 50%
of the income inclusion, but the deduction is
limited to the amount of U.S. adjusted
taxable income.
The Section 163(j) limitation does not
allow the amount of deductible interest to
exceed the sum of the taxpayer's
business interest income and 30% of the taxpayer’s adjusted taxable
income. We have included in our calculation of our effective tax rate the estimated impact of GILTI
and Section 163(j).
In addition, we
have elected to
account for the
tax on GILTI
as a
period cost and,
therefore, do not
record deferred taxes
related to GILTI
on our
foreign subsidiaries.
Our effective income tax
rate on operations for the
six-months ended March 2023 was
% compared to a rate
% in the same
period of the prior year,
and an
effective rate of
% for fiscal 2022. We generally benefit from having income in
foreign jurisdictions that are either exempt from income taxes or have tax rates that
are lower
than those
in the
United States.
As such,
changes in
the mix
of U.S.
taxable income
compared to
profits in
tax-free or
lower-tax jurisdictions
can have
significant impact on our overall effective tax rate. The current year tax
rate decreased relative to prior periods due US losses expected
to generate a US tax benefit.