Company: NGVT
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001653477-25-000127
Chunk: 40

Company: Ingevity Corp
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 1
Chunk 40
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 CORPORATIONNotes to the Condensed Consolidated Financial StatementsSeptember 30, 2025(Unaudited)

allowance on these deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. A release of all or a portion of the valuation allowance could be possible if we determine that sufficient positive evidence becomes available to allow us to reach a conclusion that the valuation allowance will no longer be needed. A release of the valuation allowance would result in the recognition of certain deferred tax assets and a reduction to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change based on the level of profitability that we are able to actually achieve.On July 4, 2025, the President signed into law the One Big Beautiful Bill ("OBBB") Act, a comprehensive tax reform package that significantly modifies U.S. federal tax policy. Based on the analysis performed by the Company, the OBBB will have an impact on cash taxes as a result of the ability to accelerate deductions. Additionally, as noted above, the increased one-time deductibility of the previously amortizable expenses in 2025 is driving our benefit from the foreign-derived intangible income deduction down significantly, which is negatively impacting the effective tax rate.During the third quarter of 2025, we determined that the earnings of our China subsidiaries are no longer permanently reinvested due to global trade volatility. As a result of this change, we recorded deferred tax expense of $1.7 million relating to China withholding taxes. With the exception of China, the Company does not currently expect to repatriate cash earnings from our foreign operations to fund U.S. operations.Pillar Two, released by the Organisation for Economic Cooperation and Development (OECD), went into effect on January 1, 2024. Pillar Two's intent is to create a 15% global minimum tax for all jurisdictions in which multinational enterprises operate. To date, fourteen of our reporting jurisdictions have enacted final legislation adopting Pillar Two. While we do not anticipate that this legislation will have a material impact on our tax provision or effective tax rate, we continue to monitor evolving tax legislation in the jurisdictions in which we operate. No tax impacts of Pillar Two were recorded for the quarter ended September 30, 2025.

Note 13: Commitments and Contingencies

Legal ProceedingsOn July 19, 2018, we filed suit against BASF Corporation ("BASF") in the United States