v3.26.1
Income Taxes
 12 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Income before income taxes includes the following components:
Year ended June 30,
($000s)202620252024
Domestic$62 $(55)$1,611 
Foreign54,232 45,987 39,375 
Total$54,294 $45,932 $40,986 
The major components of the provision for income tax expense are as follows:
Year ended June 30,
($000s)202620252024
Current tax provision
Bermuda$— $— $— 
Foreign - U.S. Federal5,233 7,019 3,203 
Foreign - U.S. State(133)2,113 1,532 
Foreign - Others2,072 3,054 2,241 
Total current expense$7,172 $12,186 $6,976 
Deferred tax provision
Bermuda$— $— $— 
Foreign - U.S. Federal1,163 (2,735)(124)
Foreign - U.S. State149 (445)155 
Foreign - Others(521)62 324 
Total deferred expense (benefit) $791 $(3,118)$355 
Provision for income tax expense$7,963 $9,068 $7,331 
The Company’s income tax provision includes the results of the Company’s U.S. operations and its various foreign operations including subsidiaries based in Canada, Jamaica, Nicaragua, Pakistan, Honduras, the Philippines, United Arab Emirates, and Saudi Arabia. Historically, the Company’s Bermuda-based companies have not been subject to income tax as there was no corporate income tax in Bermuda. On December 27, 2023, the Bermuda Corporate Income Tax Act 2023 (“CIT”) was passed which provides for a 15% corporate tax rate beginning on or after January 1, 2025 for companies with revenue in excess of 750 million Euros in two of the four previous fiscal years. The Company's consolidated revenues do not meet this 750 million Euros threshold, and accordingly, we are not currently subject to the Bermuda CIT.
The provision for income taxes differs from the expected amount calculated by applying the Company’s Bermuda statutory rate to income before income taxes as follows:
Year Ended
June 30, 2026
Tax EffectRate Effect
($000s)
Income before income taxes$54,294 
Bermuda statutory rate— 0.0 %
Foreign tax effects
United States
Statutory tax rate differential - Federal7,702 14.2 %
Statutory tax rate differential - State and Local1,446 2.7 %
Tax credits(590)(1.1)%
Stock-based payment awards(1,494)(2.8)%
Limitation on executive compensation1,007 1.9 %
Prior year taxes(772)(1.4)%
Other146 0.2 %
Philippines
Statutory tax rate differential1,655 3.0 %
Tax holiday savings(511)(0.9)%
Lease deferred tax asset(597)(1.1)%
Pakistan
Statutory tax rate differential4,147 7.6 %
Tax holiday savings(3,387)(6.2)%
Jamaica
Statutory tax rate differential714 1.3 %
Tax holiday savings(540)(1.0)%
Tax credits(145)(0.3)%
Others195 0.4 %
Nicaragua
Statutory tax rate differential764 1.4 %
Tax holiday savings(764)(1.4)%
Other foreign jurisdictions
Statutory tax rate differential317 0.6 %
Tax holiday savings(278)(0.5)%
Changes in valuation allowances(20)0.0 %
Changes in unrecognized tax benefits(1,032)(1.9)%
Provision for income tax expense$7,963 14.7 %
The reconciliation of taxes at the US federal statutory rate to income tax expense for the years ended June 30, 2025 and 2024 in accordance with the guidance prior to the adoption of ASU 2023-09 was as follows:

Year ended June 30,
20252024
U.S. federal statutory rate21.0 %21.0 %
State income taxes, net of federal deduction3.3 %2.8 %
Foreign rate differential(3.2)%(4.7)%
Non-deductible expenses / exempt income0.2 %1.0 %
Employment and other tax credits(1.4)%(1.8)%
Prior year provision / other items(0.1)%0.5 %
Change in valuation allowance(0.1)%(0.9)%
Effective tax rate percentage19.7 %17.9 %
The effective tax rate was 14.7%, 19.7% and 17.9% for the fiscal years ended June 30, 2026, 2025, and 2024, respectively. The changes in the effective tax rate between these periods was primarily attributable to changes in revenue mix across our taxable jurisdictions and discrete items, including discrete tax benefits from stock-based compensation and favorable resolution of uncertain tax positions during the current year. A substantial portion of US state and local income taxes relate to California, Georgia, Illinois and Virginia.
We have been granted “Tax Holidays” as an incentive to attract foreign investment by the governments of Nicaragua, Pakistan, Honduras, Jamaica, and certain qualifying locations in the Philippines. Generally, a Tax Holiday is an agreement between us and a foreign government under which we receive certain tax benefits in that country. In Nicaragua, we have been granted approval of exemption from income taxes until September 2035. In Pakistan, we have been granted approval for an indefinite exemption from income taxes on all exported IT services. In Honduras, we have been granted approval of exemption from income taxes under the Free Tax Zone Law until 2033. In Jamaica, we have been granted the Special Economic Zone (SEZ) developer status for multiple sites, which provides the Company with various tax incentives under the Jamaica SEZ Act including lower income tax rates. The Tax Holidays for our qualifying Philippines facilities expire at staggered dates through 2031.
Our Tax Holidays could be eliminated if there are future changes in our operations or the governmental authorities approve legislation to modify the Tax Holidays in the various taxing jurisdictions. The aggregate reduction in income tax expense due to the above Tax Holidays was $5.5 million, $5.7 million, and $5.4 million for the years ended June 30, 2026, 2025, and 2024, respectively. The aggregate reduction in income tax expense per diluted share was $0.37, $0.36, and $0.29 for the years ended June 30, 2026, 2025, and 2024, respectively.
During the year ended June 30, 2026, the Company adopted ASU 2023-09 to enhance the income taxes disclosures regarding income taxes paid and the rate reconciliation disclosure. Cash paid for income taxes, net of refunds, during the year ended June 30, 2026 were as follows:

Year ended June 30,
2026
($000s)
United States$8,952 
Philippines1,482 
Pakistan611 
Jamaica542 
Others— 
Cash paid for income taxes, net of refunds$11,587 
Significant components of deferred tax assets and liabilities included in the consolidated balance sheets are as follows:
($000s)June 30,
2026		June 30,
2025
Deferred tax assets
Provision for employee benefits and other expenses$3,376 $4,201 
Section 174 research and development capitalization2,008 1,630 
Net operating losses1,739 1,878 
Property and equipment, net448 1,337 
Lease liability (right of use assets)4,917 3,767 
Net unrealized loss on hedging668 (182)
Total deferred tax assets$13,156 $12,631 
Valuation allowance(1,095)(1,162)
Total deferred tax assets, net of valuation allowance$12,061 $11,469 
Deferred tax liabilities
Right of use assets(3,816)(3,199)
Intangible assets(1,075)(1,107)
Total deferred tax liabilities$(4,891)$(4,306)
Net deferred tax assets and liabilities$7,170 $7,163 

The Company had no U.S. gross federal net operating loss carry forwards as of June 30, 2026 and 2025, respectively, and gross state net operating loss carry forwards of approximately $11.9 million and $11.3 million as of June 30, 2026 and 2025, respectively, which may be available to offset state income tax liabilities in the future. The state net operating losses will expire based on each state’s income tax laws. The Company’s Canadian subsidiary had net operating loss carry forwards of $2.0 million and $2.1 million as of June 30, 2026 and 2025, respectively, which will begin to expire in 2028. The Company’s UK subsidiary had net operating loss carry forwards of $2.3 million and $2.4 million as of June 30, 2026 and 2025, respectively, which can be carried forward indefinitely. These amounts are estimated amounts for the year ended June 30, 2026, and based on the income tax returns filed for the year ended June 30, 2025.

The Company assesses the available positive and negative evidence whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets.

On the basis of this evaluation, valuation allowances of $1.1 million and $1.2 million have been recorded as of June 30, 2026 and 2025, respectively, to recognize only the portion of the Company’s deferred tax assets that are expected to be realized in certain foreign taxing jurisdictions. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present.

We do not provide for deferred taxes on the excess of the financial reporting basis over the tax basis in our investments in foreign subsidiaries that are essentially permanent in duration or not subject to taxation in the U.S. or in the local country.

Under accounting standards for uncertainty in income taxes (ASC 740-10), a company recognizes a tax benefit in the financial statements for an uncertain tax position only if management’s assessment is that the position is “more likely than not” (i.e., a likelihood greater than 50 percent) to be allowed by the tax jurisdiction based solely on the technical merits of the position. The term “tax position” in the accounting standards for income taxes refers to a position in a previously filed tax return or a position expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

($000s)June 30,
2026		June 30,
2025		June 30,
2024
Beginning balance$1,032 $— $— 
Additions for tax positions related to current year— — — 
Additions for tax positions of prior years— 1,032 — 
Additions for acquisitions— — — 
Reductions for tax positions of prior years— — — 
Reductions for settlements(1,032)— — 
Reductions for expiration of statute of limitations— — — 
Effect of foreign currency transactions— — — 
Ending balance$— $1,032 $— 

There were no tax benefits included in the balance of unrecognized tax benefits for the years ended June 30, 2026 and June 30, 2024 that, if recognized, would affect the Company’s effective tax rate. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $0.8 million as of June 30, 2025. We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. We have not recorded any interest expense or penalties in income tax expense for the years ended June 30, 2026, 2025 and 2024. We do not have any interest or penalties accrued as of June 30, 2026 and 2025. Over the next 12 months, the amount of the Company’s liability for unrecognized income tax benefits shown above is not expected to change materially.

We file numerous consolidated and separate income tax returns in the U.S. federal and various state jurisdictions as well as in various foreign jurisdictions. Our U.S. federal returns and most state returns for tax years 2022 and forward are subject to examination. Tax return filings in the United Kingdom for the year ended June 2022 and onward are still open for examination. Tax return filings in Canada for the year ended June 2023 and onward are still open for examination. Tax return filings in Luxembourg for the year ended June 2021 and onward are still open for examination as well as Cyprus tax returns for tax years ended June 2020.

The One Big Beautiful Bill Act (Public Law no. 119-21, the "Act") was signed on July 4, 2025, which marks the date of enactment for the tax provisions included in the Act. After evaluating the Act, management has concluded that the Company is not materially impacted based on current guidance. The Company will continue to monitor any future guidance or interpretations that could affect this assessment.