Company: GEF
Filing Date: 2025-02-27
Form Type: 10-Q
Source: 0000043920-25-000009
Chunk: 86

Company: GREIF, INC
Filing Date: 2025-02-27
Form: 10-Q
Item: Part I, Item 8
Chunk 86
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Our quarterly income tax expense was computed in accordance with Accounting Standards Codification (“ASC”) 740-270, "Income Taxes - Interim Reporting." In accordance with this accounting standard, annual estimated tax expense is computed based on forecasted annual earnings and other forecasted annual amounts, including, but not limited to items such as uncertain tax positions and withholding taxes. Additionally, losses from jurisdictions for which a valuation allowance has been provided 

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have not been included in the annual estimated tax rate. Income tax expense each quarter is provided for on a current year-to-date basis using the annual estimated tax rate, adjusted for discrete taxable events that occur during the interim period.

A number of countries have enacted legislation to implement the Organization for Economic Cooperation and Development’s global minimum tax regime of 15% of reported profits (the “Pillar 2 taxes”). During 2023 and 2024, many countries began to incorporate the Pillar 2 tax model rule concepts into their domestic laws. Although the model rules provide a framework for applying the minimum tax, countries may enact the Pillar 2 taxes slightly differently than the model rules and on different timelines and may adjust domestic tax incentives in response to the Pillar 2 taxes. We do not expect these changes to have a material impact on our consolidated financial statements for 2025. We continue to evaluate the impacts of proposed and enacted legislation with respect to the global minimum tax regime in the jurisdictions in which we operate. Our effective tax rate and cash tax payments could increase in future periods as further jurisdictions enact legislation.

Income tax expense for the first quarter of 2025 was $7.8 million on $21.8 million of pretax income, and income tax benefit for the first quarter of 2024 was $38.2 million on $35.6 million of pretax income. The $46.0 million net increase in income tax expense was primarily attributable to the following:

•A $48.1 million increase related to non-recurring discrete tax benefits was recorded during the first quarter of 2024 related to the recognition of deferred tax assets due to the onshoring of certain intangible property;

•A $2.7 million increase related to other miscellaneous discrete items; and

•A $4.8 million decrease related to changes in the expected mix of earnings among tax jurisdictions, including jurisdictions for which valuation allowances have been recorded, as well as the timing of recognition of the related tax expense.

We are subject to audits by U