Their effective tax rate is dictated by their global revenue mix and the extent and nature of their physical presence in each jurisdiction. The note disclosures don't appear to specifically call out any one time adjustments and don't seem to reflect the release of any kind of valuation allowance (though they do note that subject to on-going IRS audits that they may recognize some tax benefits in the next 12 months).
The 10-Q makes no reference to the full deferred tax asset (usually only mentioned in the 10-K) or valuation allowance, so it does not appear that the effective tax rate was driven by a release of any of those assets/allowances.
So, we do know the following:
- Sales in China are at 15% tax rates (it may actually be lower, with an RD shop in Shanghai, depending on their approach to IP residency, they may actually drive tax losses in some years);
- Sales in EU (reg credits, but will start to see more tax basis with Berlin presence) likely in the 20-25% range; this may start to drop in future years with an RD shop in Berlin, again all depending on their IP residency strategies);
- Sales in US mostly in the 3-5% (state taxes) until they have fully consumed their prior year losses and stock based compensation tax benefits, this is also the jurisdiction that will benefit from the realization of their deferred tax assets; so we are unlikely to see a high (20-28%) US Tax rate for a few years;
