Table:
|  |  | Year ended March 31, |  |
| --- | --- | --- | --- |
|  | 2019 | 2018 | 2017 |
| Tax at statutory rate | 19.0% | 19.0% | 20.0% |
| U.S. state taxes, net of federal | 31.1 | 14.1 | (1.0) |
| Foreign rate differential | 26.3 | 36.8 | (39.3) |
| Meals and entertainment | (11.4) | (3.1) | (7.4) |
| Branch income / loss | (0.6) | 0.4 | 0.9 |
| Share-based compensation | 172.3 | 105.3 | (4.0) |
| Foreign exchange | — | — | (24.8) |
| Non-deductible interest expense | — | — | (3.3) |
| Tax credits | 7.7 | 8.1 | 15.6 |
| Unremitted earnings | (3.8) | (1.2) | — |
| Change in valuation allowance | (249.9) | (110.7) | 124.7 |
| Deferred tax true-ups | (3.5) | 8.4 | (12.4) |
| Tax reserves | (4.9) | (21.5) | (117.7) |
| Provision to return | (0.1) | 0.4 | (0.7) |
| Withholding taxes | (2.6) | (3.5) | — |
| Other foreign taxes | — | — | (6.7) |
| Non-deductible expenses | (5.2) | (2.4) | (10.6) |
| Deferred tax rate change | (6.3) | (77.8) | (1.3) |
| Acquisition related costs | (7.6) | — | — |
| Other | (0.5) | (0.2) | — |
| Effective Tax Rate | (40.0)% | (27.9)% | (68.0)% |
Paragraphs:
The reconciliation of the United Kingdom statutory tax rate to the Company’s effective tax rate included in the accompanying consolidated statements of operations is as follows:
Although the Company’s parent entity is organized under Jersey law, our affairs are, and are intended to be, managed and controlled ongoing in the United Kingdom. Therefore, the Company is resident in the United Kingdom for tax purposes. The Company’s parent entity is domiciled in the United Kingdom and its earnings are subject to 19%, 19% and 20% statutory tax rate for the years ended March 31, 2019, 2018 and 2017, respectively.
The Company’s effective tax rate differs from the statutory rate each year primarily due to windfall tax benefits on equity award exercises, the valuation allowance maintained against the Company’s net deferred tax assets, the jurisdictional earnings mix, tax credits, withholding taxes, and other permanent differences primarily related to non-deductible expenses.
Question:
What is the reason for the company's effective tax to differ from the statutory rate?
Answer: primarily due to windfall tax benefits on equity award exercises, the valuation allowance maintained against the Company’s net deferred tax assets, the jurisdictional earnings mix, tax credits, withholding taxes, and other permanent differences primarily related to non-deductible expenses.