Income Taxes |
3 Months Ended |
|---|---|
Mar. 31, 2025 | |
| Income Tax Disclosure [Abstract] | |
| Income taxes | Income taxes In computing the provision for income taxes for interim periods, the Company estimates the annual effective tax rate for the full year, which is then applied to the actual year-to-date ordinary income (loss) and reflects the tax effects of discrete items in its provision for income taxes as they occur. The provision for income taxes for the three months ended March 31, 2025 and 2024 was $6.0 million and $6.9 million, respectively. The decrease was primarily attributable to the year-over-year change in the geographical distribution of income. The effective tax rate for the three months ended March 31, 2025 and 2024 was 10.4% and 19.7%, respectively. The decrease was primarily driven by the geographical distribution of income and the varying tax regimes of jurisdictions. Excelerate is a corporation for U.S. federal and state income tax purposes. EELP is treated as a pass-through entity for U.S. federal income tax purposes and, as such, has generally not been subject to U.S. federal income tax at the entity level. The Company has international operations that are also subject to foreign income tax and U.S. corporate subsidiaries subject to U.S. federal tax. Therefore, its effective income tax rate is dependent on many factors, including geographical distribution of income, a rate benefit attributable to the portion of the Company’s earnings not subject to corporate level taxes, and the impact of nondeductible items and foreign exchange impacts as well as varying tax regimes of jurisdictions. In one jurisdiction, the Company’s tax rate is significantly less than the applicable statutory rate as a result of a tax holiday that was granted. This tax holiday will expire in 2033 at the same time that the Company’s contract and revenue with its customer ends. The Organization for Economic Co-operation and Development has established the Pillar Two Framework, which generally provides for a minimum effective tax rate of 15%. The Pillar Two Framework has been supported by numerous countries worldwide. The effective dates are January 1, 2024 and January 1, 2025, for different aspects of the directive. The Company is evaluating the potential impact of the Pillar Two Framework on income taxes in future periods, including potential impacts to its Tax Receivable Agreement (“TRA”) liability, pending legislative adoption by additional individual countries. |