FIRST ADVANTAGE CORP Income Taxes Disclosure

Note 8. Income Taxes

The Company is a U.S. domiciled corporation for tax purposes. The Company’s income tax expense and balance sheet accounts reflect the results of the Company and its subsidiaries.

Effective with annual reporting for the year ended December 31, 2025, the Company adopted ASU 2023-09. See Note 2 — Summary of Significant Accounting Policies – Recently Adopted Accounting Pronouncements for additional information on the adoption of ASU 2023-09. A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate pursuant to the disclosure requirements of ASU 2023-09 for the years ended December 31, 2025, 2024, and 2023, respectively, is as follows (in thousands, except percentages):

As of December 31, 2025, the Company had approximately $164.2 million of accumulated unremitted earnings generated by its foreign subsidiaries. Under the U.S. Tax Cuts and Jobs Act of 2017 (“2017 Tax Act”), a portion of these earnings was subject to U.S. federal taxation with the one-time transition tax. With the exception of certain unremitted earnings in Canada, China, India, and the United Kingdom, the Company asserted indefinite reinvestment on its unremitted earnings as well as any other additional outside basis differences of its foreign subsidiaries at December 31, 2025. Any future reversals could be subject to additional foreign withholding taxes, U.S. state taxes, and certain tax impacts relating to foreign currency exchange effects on any future repatriations of the unremitted earnings.

As of December 31, 2025, the Company had $15.1 million of U.S. federal net operating loss (“NOL”) carryforwards acquired in the Sterling Acquisition. These federal NOLs are subject to annual utilization limitations and will begin to expire in 2026. The Company also had a $7.2 million deferred tax asset related to U.S. state NOL carryforwards. These state NOLs include amounts with various expiration dates beginning in 2026, as well as certain state NOLs that may be carried forward indefinitely. In addition, the Company had a $7.8 million deferred tax asset related to foreign NOL carryforwards. These foreign NOLs include amounts that will begin to expire in 2026, along with other foreign NOLs that do not expire and may be carried forward indefinitely.

After consideration of all of the evidence, the Company has determined that a valuation allowance of approximately $5.9 million and $5.6 million is necessary as of December 31, 2025 and 2024, respectively, for certain federal and foreign net operating loss carryforwards and other foreign deferred tax assets. The increase in the valuation allowance in 2025 is primarily due to the additional valuation allowance in Australia during the year.

The Company is no longer subject to U.S. federal examinations by tax authorities for years before 2012, and state, local, and non-U.S. income tax examinations by tax authorities before 2012.

An income tax benefit of approximately $5.2 million would be recorded if these unrecognized tax benefits are recognized. The Company recognizes accrued interest related to unrecognized tax benefits and penalties in income tax expense. For the years ended December 31, 2025, 2024, and 2023, the Company accrued $1.5 million, $1.2 million, and $0.5 million, respectively, for interest and penalties related to uncertain tax positions.

On December 15, 2022, member states of the European Union (“EU”) formally adopted the EU Pillar Two Directive, which implements a global minimum effective tax rate of 15% consistent with the Organization for Economic Co-operating and Development (“OECD”) Pillar Two Framework. Various provisions of the directive became effective beginning on January 1, 2024 and January 1, 2025. In addition, several other jurisdictions enacted Pillar Two legislation during 2025, with varying effective dates. As a result of the Sterling acquisition, the Company exceeded the applicable consolidated revenue threshold in 2024 and became subject to Pillar Two rules for the years ended December 31, 2025 and December 31, 2024. In evaluating its exposure under the Income Inclusion Rule (“IIR”), Undertaxed Profit Rule (“UTPR”), and any applicable Qualified Domestic Minimum Top-Up Taxes (“QDMTT”), the Company applied the Transitional Country-by-Country Reporting (“CbCR”) Safe Harbor in accordance with the OECD Administrative Guidance. Based on this assessment, the Company determined that it did not incur any material Pillar Two top-up tax obligations for either of the years ended December 31 2025 and December 31, 2024. The Company will continue to monitor global legislative developments and evaluate the potential impact of Pillar Two on future reporting periods as additional jurisdictions adopt or modify their implementing rules.

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted into law in the United States, introducing substantial changes to the U.S. Corporate tax regime. Key provisions of the OBBBA include the reinstatement of 100% bonus depreciation, the restoration of immediate expensing for domestic research or experimental (“R&E”) expenditures, an elective acceleration of deduction for unamortized domestic R&E expenditures, revised limitations on the deductibility of business interest expense, and modifications to the Global Intangible Low-Tax Income (“GILTI”) and Foreign-Derived Intangible Income (“FDII”) regimes. The OBBBA includes multiple effective dates, with certain provisions effective tax years beginning after December 31, 2024, and others phased in through 2027. In accordance with ASC 740, Income Taxes, the Company reflected the impacts of OBBBA in the interim period that includes the enactment date. The effects of the new legislation, including the remeasurement of applicable deferred tax assets and liabilities, have been incorporated into the Company’s income tax provision for the year ended December 31, 2025. The Company continues to evaluate the broader implications of the OBBBA, including potential impacts on future taxable income, the estimated annual effective tax rate, and potential effects of future regulatory or administrative guidance issued by the Internal Revenue Service or other relevant tax authorities. Additional impacts, if any, will be recognized in subsequent periods as appropriate.