BLACKBERRY LtdBB
BLACKBERRY Ltd Income Taxes Disclosure
INCOME TAXES
A reconciliation of the provision for income taxes to the amount computed by applying the 15%(1) statutory Canadian federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows:
| For the Year Ended | |||||||||||
| February 28, 2026 | |||||||||||
| Amount | Percent | ||||||||||
| Tax at Canadian Statutory Rate | $ | 8.9 | 15.0 | % | |||||||
Provincial taxes, net of federal tax effect (2) | (0.1) | (0.2) | % | ||||||||
| Foreign Tax Effects | |||||||||||
| United States | |||||||||||
| Foreign federal rate differences | 0.4 | 0.7 | % | ||||||||
| State and local income taxes | (0.5) | (0.8) | % | ||||||||
| Prior period adjustment | 0.4 | 0.7 | % | ||||||||
| Non-deductible compensation | 1.1 | 1.9 | % | ||||||||
| Research and development tax credits | (0.1) | (0.2) | % | ||||||||
| Other | (0.2) | (0.3) | % | ||||||||
| Valuation allowance | (2.1) | (3.6) | % | ||||||||
| Germany | |||||||||||
| Foreign federal rate differences | (0.3) | (0.5) | % | ||||||||
| State and local income taxes | 1.4 | 2.4 | % | ||||||||
| Korea | 0.5 | 0.8 | % | ||||||||
| Other foreign jurisdictions | 0.4 | 0.7 | % | ||||||||
| Changes in Valuation Allowances | (3.4) | (5.8) | % | ||||||||
| Investment Tax credits | (3.3) | (5.6) | % | ||||||||
| Nontaxable and Nondeductible items | |||||||||||
| Share-based payment awards | 2.3 | 4.0 | % | ||||||||
| Others | 0.2 | 0.3 | % | ||||||||
| Changes in Unrecognized Tax Benefits | 0.2 | 0.3 | % | ||||||||
| Other Adjustments | — | — | % | ||||||||
| Effective Tax Rate | $ | 5.8 | 9.8 | % | |||||||
______________________________
(1) This represents the Canadian federal statutory income tax rate, which is 15% after a 13% general tax reduction and 10% federal tax abatement are applied to the 38% basic rate.
(2) Provincial taxes in Ontario made up the majority of the tax effect in this category.
The difference between the amount of the provision for (recovery of) income taxes and the amount computed by multiplying income (loss) before income taxes by the statutory Canadian tax rate is reconciled for the year ended February 28, 2025 and February 29, 2024 as follows:
| For the Years Ended | ||||||||||||||
| February 28, 2025 | February 29, 2024 | |||||||||||||
Statutory Canadian tax rate (1) | 26.5 | % | 26.5 | % | ||||||||||
| Expected provision for (recovery of) income taxes | $ | 2.3 | $ | 7.9 | ||||||||||
| Differences in income taxes resulting from: | ||||||||||||||
| Valuation allowance | 1.6 | (3.3) | ||||||||||||
| Investment tax credits | (8.1) | (10.0) | ||||||||||||
| Change in unrecognized income tax benefits | (0.1) | (1.1) | ||||||||||||
| Foreign tax rate differences | 5.9 | 4.5 | ||||||||||||
| Non-deductible permanent differences | 8.8 | 7.7 | ||||||||||||
| Goodwill de-recognition | — | 4.2 | ||||||||||||
| Prior period adjustments | (0.4) | 8.6 | ||||||||||||
| Other differences | 7.0 | 5.7 | ||||||||||||
| $ | 17.0 | $ | 24.2 | |||||||||||
______________________________
(1) This tax rate represents a basic Part I federal tax rate of 38%, net 15% after federal tax abatement and general tax reduction, plus the additional provincial tax of 11.5%.
| For the Years Ended | |||||||||||||||||
| February 28, 2026 | February 28, 2025 | February 29, 2024 | |||||||||||||||
| Income (loss) before income taxes: | |||||||||||||||||
| Canadian | $ | 29.2 | $ | (9.1) | $ | (18.3) | |||||||||||
| Foreign | 29.8 | 17.6 | 48.1 | ||||||||||||||
| $ | 59.0 | $ | 8.5 | $ | 29.8 | ||||||||||||
The provision for (recovery of) income taxes consists of the following:
| For the Years Ended | |||||||||||||||||
| February 28, 2026 | February 28, 2025 | February 29, 2024 | |||||||||||||||
| Current | |||||||||||||||||
| Canadian | $ | (0.2) | $ | (0.4) | $ | (0.8) | |||||||||||
| Foreign | 6.0 | 17.4 | 25.0 | ||||||||||||||
| $ | 5.8 | $ | 17.0 | $ | 24.2 | ||||||||||||
Deferred income tax assets and liabilities consist of the following temporary differences:
| As at | |||||||||||
| February 28, 2026 | February 28, 2025 | ||||||||||
| Assets | |||||||||||
| Property, plant, equipment and intangibles assets | $ | 267.2 | $ | 263.3 | |||||||
| Non-deductible reserves | 19.5 | 21.3 | |||||||||
| Minimum taxes | 206.7 | 206.7 | |||||||||
| Research and development | 386.4 | 410.5 | |||||||||
| Tax loss carryforwards | 499.6 | 474.7 | |||||||||
| Other | 133.4 | 141.3 | |||||||||
| Deferred income tax assets | 1,512.8 | 1,517.8 | |||||||||
| Valuation allowance | 1,512.8 | 1,517.2 | |||||||||
| Deferred income tax assets net of valuation allowance | — | 0.6 | |||||||||
| Liabilities | |||||||||||
| Property, plant, equipment and intangibles assets | — | 0.6 | |||||||||
| Deferred income tax liabilities | — | 0.6 | |||||||||
| Net deferred income tax asset (liability) | $ | — | $ | — | |||||||
The Company regularly assesses the need for a valuation allowance against its deferred tax assets. In making that assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will be realized.
In evaluating the need for a valuation allowance, the Company noted a history of continuous cumulative losses. In fiscal 2026, the Company saw a decrease in the deferred tax valuation allowance of $4.4 million (February 28, 2025 - decrease of $2.5 million). As a result, the deferred tax valuation allowance had an ending balance of $1,512.8 million (February 28, 2025 - $1,517.2 million). This accounting treatment has no effect on the Company’s ability to utilize deferred tax assets to reduce future cash tax payments. The Company will continue to assess the likelihood that the deferred tax assets will be realizable at each reporting period and the valuation allowance will be adjusted accordingly.
The Company’s total unrecognized income tax benefits as at February 28, 2026 and February 28, 2025 were $19.7 million and $19.5 million, respectively. A reconciliation of the beginning and ending amount of unrecognized income tax benefits that, if recognized, would affect the Company’s effective income tax rate is as follows:
| For the Years Ended | |||||||||||||||||
| February 28, 2026 | February 28, 2025 | February 29, 2024 | |||||||||||||||
| Unrecognized income tax benefits, opening balance | $ | 19.5 | $ | 19.6 | $ | 20.6 | |||||||||||
| Increase for income tax positions of current year | 0.2 | 0.2 | 1.0 | ||||||||||||||
| Settlement of tax positions | — | (0.3) | (2.0) | ||||||||||||||
| Unrecognized income tax benefits, ending balance | $ | 19.7 | $ | 19.5 | $ | 19.6 | |||||||||||
As at February 28, 2026, $19.6 million of the unrecognized tax benefits have been netted against deferred income taxes and $0.1 million has been recorded within income taxes payable on the Company’s consolidated balance sheets.
A summary of open tax years by major jurisdiction is presented below:
| Jurisdiction | |||||
Canada (1) | Fiscal 2016 - 2026 | ||||
United States (2) | Fiscal 2023 - 2026 | ||||
| United Kingdom | Fiscal 2025 - 2026 | ||||
| Germany | Fiscal 2021 - 2026 | ||||
______________________________
(1) Includes federal as well as provincial jurisdictions, as applicable.
(2) Pertains to federal tax years. Certain state jurisdictions remain open from fiscal 2022 through fiscal 2026.
We adopted ASU 2023-09 on a prospective basis for the year ended February 28, 2026 and have included the following table as a result of our adoption, which presents income taxes paid (net of refunds received) for the year ended February 28, 2026:
| For the Year Ended | |||||
| February 28, 2026 | |||||
| Canadian Federal | $ | — | |||
| Provincial | (0.3) | ||||
| Foreign | |||||
| Germany | 19.1 | ||||
| India | 0.9 | ||||
| All other foreign | 1.8 | ||||
| Income taxes, net of amounts refunded | $ | 21.5 | |||
The Company is subject to ongoing examination by tax authorities in the jurisdictions in which it operates. The Company regularly assesses the status of these examinations and the potential for adverse outcomes to determine the adequacy of the provision for income taxes, as well as the provisions for indirect and other taxes and related penalties and interest. The Company believes it is reasonably possible that approximately nil of its gross unrecognized income tax benefits will be realized in the next twelve months. While the final resolution of these audits is uncertain, the Company believes the ultimate resolution of these audits will not have a material adverse effect on its consolidated financial position, liquidity or results of operations.
The Company recognizes interest and penalties related to unrecognized income tax benefits as interest expense that is netted and reported within investment income, net. The amount of interest accrued as at February 28, 2026 was approximately $3.1 million (February 28, 2025 - approximately $3.0 million). The amount of penalties accrued as at February 28, 2026 was nil (February 28, 2025 - nil).
As at February 28, 2026, the Company has the following net operating loss carryforwards and tax credits, which are scheduled to expire in the following years:
| Year of Expiry | Net Operating Losses | Research and Development Tax Credits (1) | Minimum Taxes | |||||||||||||||||
| 2029 | $ | — | $ | — | $ | 1.1 | ||||||||||||||
| 2030 | — | — | 107.8 | |||||||||||||||||
| 2031 | — | — | 71.7 | |||||||||||||||||
| 2032 | 27.5 | — | 22.2 | |||||||||||||||||
| 2033 | 80.5 | 111.8 | 0.2 | |||||||||||||||||
| 2034 | 85.5 | 124.1 | 0.1 | |||||||||||||||||
| 2035 | 81.0 | 52.1 | 3.6 | |||||||||||||||||
| 2036 | 308.9 | 39.8 | — | |||||||||||||||||
| 2037 | 492.5 | 23.7 | — | |||||||||||||||||
| 2038 | 199.3 | 17.3 | — | |||||||||||||||||
| 2039 | 13.1 | 14.6 | — | |||||||||||||||||
| 2040 | 3.3 | 12.9 | — | |||||||||||||||||
| 2041 | — | 7.7 | — | |||||||||||||||||
| 2042 | — | 11.0 | — | |||||||||||||||||
| 2043 | 181.6 | 13.6 | — | |||||||||||||||||
| 2044 | — | 12.8 | — | |||||||||||||||||
| 2045 | — | 8.2 | — | |||||||||||||||||
| 2046 | — | 5.2 | — | |||||||||||||||||
| Indefinite | 432.1 | 21.2 | — | |||||||||||||||||
| $ | 1,905.3 | $ | 476.0 | $ | 206.7 | |||||||||||||||
______________________________
(1) Includes federal, provincial and state balances.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Apr 9, 2026 | Showing above |
| 2025 | Apr 2, 2025 | |
| 2024 | Apr 4, 2024 | |
| 2023 | Mar 31, 2023 | |
| 2022 | Apr 1, 2022 | |
| 2021 | Mar 31, 2021 | |
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.