Accenture plcACN
Accenture plc Income Taxes Disclosure
Income Taxes
| Fiscal | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current taxes | |||||||||||||||||
| U.S. federal | $ | 238,115 | $ | 408,281 | $ | 422,435 | |||||||||||
| U.S. state and local | 88,612 | 173,024 | 220,043 | ||||||||||||||
| Non-U.S. | 1,753,918 | 1,792,809 | 1,762,277 | ||||||||||||||
| Total current tax expense | 2,080,645 | 2,374,114 | 2,404,755 | ||||||||||||||
| Deferred taxes | |||||||||||||||||
| U.S. federal | 53,095 | (154,553) | (334,942) | ||||||||||||||
| U.S. state and local | 33,112 | (55,141) | (63,098) | ||||||||||||||
| Non-U.S. | 271,141 | 115,706 | 129,087 | ||||||||||||||
| Total deferred tax (benefit) expense | 357,348 | (93,988) | (268,953) | ||||||||||||||
| Total | $ | 2,437,993 | $ | 2,280,126 | $ | 2,135,802 | |||||||||||
The components of Income before income taxes are as follows:
| Fiscal | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| U.S. sources | $ | 1,071,581 | $ | 1,628,818 | $ | 1,562,011 | |||||||||||
| Non-U.S. sources | 9,198,812 | 8,070,505 | 7,577,321 | ||||||||||||||
| Total | $ | 10,270,393 | $ | 9,699,323 | $ | 9,139,332 | |||||||||||
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted in the U.S. The OBBBA contains a number of provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The act has multiple effective dates that generally apply to us beginning with fiscal year 2026, and we expect the impacts on our consolidated financial statements to be immaterial.
The reconciliation of the U.S. federal statutory income tax rate to our effective income tax rate is as follows:
| Fiscal | |||||||||||||||||
| 2025 | 2024 | 2023 (2) | |||||||||||||||
| U.S. federal statutory income tax rate | 21.0 | % | 21.0 | % | 21.0 | % | |||||||||||
| U.S. state and local taxes, net | 0.7 | 0.9 | 1.1 | ||||||||||||||
| Non-U.S. operations taxed at other rates | — | 1.0 | 1.4 | ||||||||||||||
| Final determinations (1) | (1.5) | (1.2) | (1.0) | ||||||||||||||
| Other net activity in unrecognized tax benefits | 3.0 | 2.7 | 3.2 | ||||||||||||||
| Excess tax benefits from share based payments | (0.6) | (1.0) | (1.3) | ||||||||||||||
| Foreign-derived intangible income deduction | (1.4) | (1.5) | (2.1) | ||||||||||||||
| Other, net | 2.5 | 1.6 | 1.1 | ||||||||||||||
| Effective income tax rate | 23.7 | % | 23.5 | % | 23.4 | % | |||||||||||
(1)Final determinations include final agreements with tax authorities and expirations of statutes of limitations.
(2)Prior period amounts have been reclassified to conform with the current period presentation.
As of August 31, 2025, we had not recognized a deferred tax liability on approximately $6,600,000 of undistributed earnings for certain foreign subsidiaries, because these earnings are intended to be indefinitely reinvested. If such earnings were distributed, some countries may impose additional taxes. The unrecognized deferred tax liability (the amount payable if distributed) is approximately $340,000.
Portions of our operations are subject to reduced tax rates or are free of tax under various tax holidays which expire through fiscal 2034. The income tax benefits attributable to the tax status of these subsidiaries were estimated to be approximately $50,000, $44,000 and $40,000 in fiscal 2025, 2024 and 2023, respectively.
The revaluation of deferred tax assets and liabilities due to enacted changes in tax laws and tax rates did not have a material impact on our effective tax rate in fiscal 2025, 2024, or 2023.
The components of our deferred tax assets and liabilities included the following:
| August 31, 2025 | August 31, 2024 (1) | ||||||||||
| Deferred tax assets | |||||||||||
| Pensions | $ | 494,346 | $ | 542,749 | |||||||
| Compensation and benefits | 902,451 | 756,863 | |||||||||
| Share-based compensation | 603,195 | 558,772 | |||||||||
| Tax credit carryforwards | 1,544,834 | 1,481,510 | |||||||||
| Net operating loss carryforwards | 266,770 | 287,818 | |||||||||
| Deferred amortization deductions | 649,143 | 788,681 | |||||||||
| Indirect effects of unrecognized tax benefits | 369,406 | 399,504 | |||||||||
| Licenses and other intangibles | 651,160 | 866,606 | |||||||||
| Leases | 725,001 | 771,755 | |||||||||
| Capitalized research costs | 287,480 | 667,999 | |||||||||
| Other | 1,185,022 | 858,875 | |||||||||
| Total deferred tax assets | 7,678,808 | 7,981,132 | |||||||||
| Valuation allowance | (1,689,015) | (1,618,414) | |||||||||
| Deferred tax assets, net of valuation allowance | 5,989,793 | 6,362,718 | |||||||||
| Deferred tax liabilities | |||||||||||
| Pensions | (156,872) | (162,221) | |||||||||
| Investments in subsidiaries | (226,901) | (243,796) | |||||||||
| Intangibles | (813,876) | (826,078) | |||||||||
| Leases | (635,331) | (677,569) | |||||||||
| Revenue recognition | (255,333) | (99,317) | |||||||||
| Other | (582,196) | (635,086) | |||||||||
| Total deferred tax liabilities | (2,670,509) | (2,644,067) | |||||||||
| Net deferred tax assets | $ | 3,319,284 | $ | 3,718,651 | |||||||
(1)Prior period amounts have been reclassified to conform with the current period presentation.
We recorded valuation allowances of $1,689,015 and $1,618,414 as of August 31, 2025 and 2024, respectively, against deferred tax assets principally associated with certain tax credit and tax net operating loss carryforwards, as we believe it is more likely than not that these assets will not be realized. For all other deferred tax assets, we believe it is more likely than not that the results of future operations will generate sufficient taxable income to realize these deferred tax assets. During fiscal 2025 and 2024, we recorded net increases of $70,601 and $137,737 in the valuation allowance, respectively, primarily related to valuation allowances on certain tax credit carryforwards, as we believe it is more likely than not that these assets will not be realized.
We had tax credit carryforwards as of August 31, 2025 of $1,544,834, of which $22,555 will expire between 2026 and 2035 and $1,522,279 has an indefinite carryforward period. We had net operating loss carryforwards as of August 31, 2025 of $1,089,806. Of this amount, $134,443 expires between 2026 and 2035, $87,549 expires between 2036 and 2045, and $867,814 has an indefinite carryforward period.
As of August 31, 2025, we had $2,409,655 of unrecognized tax benefits, of which $1,614,917, if recognized, would favorably affect our effective tax rate. As of August 31, 2024, we had $1,904,867 of unrecognized tax benefits, of which $1,408,347, if recognized, would favorably affect our effective tax rate. The remaining unrecognized tax benefits as of August 31, 2025 and 2024 of $794,738 and $496,520, respectively, represent items recorded as offsetting tax benefits associated with the correlative effects of potential transfer pricing adjustments, state income taxes and timing adjustments.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
| Fiscal | |||||||||||
| 2025 | 2024 | ||||||||||
| Balance, beginning of year | $ | 1,904,867 | $ | 1,744,481 | |||||||
| Additions for tax positions related to the current year | 430,312 | 348,146 | |||||||||
| Additions for tax positions related to prior years | 501,497 | 95,354 | |||||||||
| Reductions for tax positions related to prior years | (314,740) | (189,689) | |||||||||
| Statute of limitations expirations | (99,001) | (85,362) | |||||||||
| Settlements with tax authorities | (12,396) | (11,488) | |||||||||
| Cumulative translation adjustment | (884) | 3,425 | |||||||||
| Balance, end of year | $ | 2,409,655 | $ | 1,904,867 | |||||||
We recognize interest and penalties related to unrecognized tax benefits in our Income tax expense. During fiscal 2025, 2024 and 2023, we recognized a benefit of $20,036 and expense of $37,396 and $21,137 in interest and penalties, respectively. Accrued interest and penalties related to unrecognized tax benefits of $186,901 ($173,628, net of tax benefits) and $210,642 ($198,328, net of tax benefits) were reflected on our Consolidated Balance Sheets as of August 31, 2025 and 2024, respectively.
As a global company, we file tax returns in numerous tax jurisdictions including the U.S. and Ireland, where in both jurisdictions the tax years from fiscal 2021 forward remain open for examination. We participate in the U.S. Internal Revenue Service (“IRS”) Compliance Assurance Process (“CAP”). In CAP, the IRS examines tax years on a contemporaneous basis, and most issues are resolved prior to filing the tax return. We also participate in the Irish Cooperative Compliance Framework (“CCF”) which promotes a collaborative approach to tax return review between taxpayers and Irish Revenue. In addition, we are negotiating a bilateral Advance Pricing Agreement (“APA”) with the U.S. and Ireland that covers fiscal 2021 through fiscal 2025. We expect through this APA to gain certainty and avoid prolonged disputes on the pricing of intercompany transactions between the U.S. and Ireland. We expect to conclude the APA in fiscal 2026 or fiscal 2027.
We are currently under audit in U.S. state and other non-U.S. tax jurisdictions. However, with limited exceptions, we are no longer subject to examination by those taxing authorities for years before 2017. Although the outcome of tax audits is always uncertain and could result in significant cash tax payments, we do not believe the outcome of these audits will have a material adverse effect on our consolidated financial position or results of operations. We believe that it is reasonably possible that our unrecognized tax benefits could decrease by approximately $187,000 or increase by approximately $1,400,000 in the next 12 months as a result of settlements, lapses of statutes of limitations, tax audit activity and other agreements with taxing authorities. The majority of these amounts relate to transfer pricing matters in both U.S. and non-U.S. tax jurisdictions.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Oct 10, 2025 | Showing above |
| 2024 | Oct 10, 2024 | |
| 2023 | Oct 12, 2023 | |
| 2022 | Oct 12, 2022 | |
| 2021 | Oct 15, 2021 | |
| 2020 | Oct 22, 2020 | |
| 2019 | Oct 29, 2019 | |
| 2018 | Oct 24, 2018 | |
| 2017 | Oct 26, 2017 | |
| 2016 | Oct 28, 2016 | |
| 2015 | Oct 30, 2015 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.