FRESH DEL MONTE PRODUCE INCFDP
FRESH DEL MONTE PRODUCE INC Income Taxes Disclosure
Income Taxes
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We adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures on a prospective basis for the year ended December 26, 2025.
The provision for income taxes consisted of the following (U.S. dollars in millions):
| Year ended | |||||||||||||||||
| December 26, 2025 | December 27, 2024 | December 29, 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| U.S. federal income tax | $ | 0.2 | $ | 0.1 | $ | 0.1 | |||||||||||
| State | 1.9 | 0.7 | 1.0 | ||||||||||||||
| Non-U.S. | 27.3 | 24.8 | 20.8 | ||||||||||||||
| 29.4 | 25.6 | 21.9 | |||||||||||||||
| Deferred: | |||||||||||||||||
| U.S. federal income tax | (0.6) | 0.3 | (1.1) | ||||||||||||||
| State | (0.7) | 0.2 | (0.2) | ||||||||||||||
| Non-U.S. | 9.3 | 3.0 | (2.5) | ||||||||||||||
| 8.0 | 3.5 | (3.8) | |||||||||||||||
| $ | 37.4 | $ | 29.1 | $ | 18.1 | ||||||||||||
Income before income taxes consisted of the following (U.S. dollars in millions):
| Year ended | |||||||||||||||||
| December 26, 2025 | December 27, 2024 | December 29, 2023 | |||||||||||||||
| U.S. | $ | 2.4 | $ | 8.5 | $ | (136.4) | |||||||||||
| Non-U.S. | 128.5 | 162.2 | 152.9 | ||||||||||||||
| $ | 130.9 | $ | 170.7 | $ | 16.5 | ||||||||||||
In accordance with the updated requirements of ASU 2023-09 for the year ended December 26, 2025, a reconciliation of the U.S. federal statutory income tax rate to the effective tax rate are explained in the following (U.S. dollars in millions):
| December 26, 2025 | |||||||||||
| Amount | Rate | ||||||||||
| U.S. federal statutory income tax at 21% | $ | 27.5 | 21.0 | % | |||||||
State and local income taxes, net of federal income tax effect (a) | 2.0 | 1.6 | % | ||||||||
| Enactment of new tax laws | 0.2 | 0.2 | % | ||||||||
| Tax Credits | (0.1) | (0.1) | % | ||||||||
| Valuation allowance | (4.0) | (3.1) | % | ||||||||
| Other | 2.4 | 1.9 | % | ||||||||
| Foreign tax effects: | |||||||||||
| Brazil | |||||||||||
| Foreign currency adjustment | 7.4 | 5.6 | % | ||||||||
| Changes in valuation allowance | (6.2) | (4.7) | % | ||||||||
| Other | 0.1 | 0.1 | % | ||||||||
| Cayman Islands | |||||||||||
| Foreign rate differential | 2.9 | 2.1 | % | ||||||||
| Chile | |||||||||||
| Local tax law adjustment | (1.7) | (1.3) | % | ||||||||
| Changes in valuation allowance | 2.4 | 1.8 | % | ||||||||
| Costa Rica | |||||||||||
| Foreign rate differential | 7.7 | 5.9 | % | ||||||||
| Statutory tax regime | (19.8) | (15.2) | % | ||||||||
| Other | (0.7) | (0.6) | % | ||||||||
| Guatemala | |||||||||||
| Nondeductible expenses | 1.7 | 1.3 | % | ||||||||
| Non-taxable income (loss) | (1.4) | (1.1) | % | ||||||||
| Other taxes | 2.0 | 1.6 | % | ||||||||
| Other | 0.8 | 0.6 | % | ||||||||
| Luxembourg | |||||||||||
| Nondeductible interest permanent true-up | (4.5) | (3.4) | % | ||||||||
| Global minimum tax | 2.9 | 2.1 | % | ||||||||
| Changes in valuation allowance | 8.1 | 6.3 | % | ||||||||
| Permanent difference true-up | (1.5) | (1.1) | % | ||||||||
| Other | (0.3) | (0.3) | % | ||||||||
| Philippines | |||||||||||
| Nondeductible asset impairment | 7.6 | 5.8 | % | ||||||||
| Non-taxable income (loss) | (3.6) | (2.7) | % | ||||||||
| Changes in valuation allowance | 3.7 | 2.8 | % | ||||||||
| Other | (0.7) | (0.5) | % | ||||||||
| Saudi Arabia | |||||||||||
| Asset sale permanent true-up | 2.8 | 2.1 | % | ||||||||
| Other | (0.2) | (0.2) | % | ||||||||
| Switzerland | |||||||||||
| Foreign currency adjustment | 4.2 | 3.2 | % | ||||||||
| Other | (2.1) | (1.6) | % | ||||||||
| United Kingdom | |||||||||||
| Foreign rate differential | 1.8 | 1.4 | % | ||||||||
| Income not subject to income tax due to tonnage tax | (8.8) | (6.7) | % | ||||||||
| Other | 0.2 | 0.2 | % | ||||||||
| Other Foreign Jurisdictions | 2.3 | 1.8 | % | ||||||||
| Worldwide changes in unrecognized tax benefits | 2.3 | 1.7 | % | ||||||||
| Effective tax rate | $ | 37.4 | 28.5 | % | |||||||
(a)State taxes in California, Texas, North Carolina and Pennsylvania made up the majority (greater than 50 percent) of this category.
The Company has a subsidiary that operates in a jurisdiction with a statutory tax regime which provides corporate income tax incentives for qualifying activities, subject to compliance with certain operational and investment requirements for an initial period of 8 years, expiring on December 31, 2031, with the opportunity to renew. The aggregate reduction in income tax expense attributable to this was approximately $19.8 million. The impact on diluted earnings per share was $0.41 for the year ended December 26, 2025.
The differences between the reported provision for income taxes and income taxes computed at the U.S. statutory federal income tax rate for years prior to the adoption of ASU 2023-09 are explained in the following reconciliation (U.S. dollars in millions):
| Year Ended | |||||||||||
| December 27, 2024 | December 29, 2023 | ||||||||||
| Income tax provision computed at the U.S. statutory federal rate | $ | 35.9 | $ | 3.4 | |||||||
| Effect of tax rates on non-U.S. operations | (31.2) | (70.8) | |||||||||
| Provision for uncertain tax positions | (1.0) | 1.5 | |||||||||
| Non-deductible interest | 22.3 | 23.1 | |||||||||
| Foreign exchange | (18.2) | 8.1 | |||||||||
| Non-deductible differences | 1.3 | (0.7) | |||||||||
| Non-taxable income/loss | (2.1) | (0.5) | |||||||||
| Non-deductible impairment charges | 0.7 | 5.4 | |||||||||
| Other | 2.1 | 0.8 | |||||||||
| State tax benefit | 0.5 | (4.4) | |||||||||
| Other taxes in lieu of income | 5.8 | 3.5 | |||||||||
Increase in valuation allowance (1) | 13.0 | 48.7 | |||||||||
| Provision for income taxes | $ | 29.1 | $ | 18.1 | |||||||
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(1) The increase in valuation allowance includes effects of foreign exchange and adjustments to deferred tax balances which were fully offset by valuation allowance.
The table below provides the updated requirements of ASU 2023-09 for cash paid for income taxes, net of refunds during the year ended December 26, 2025:
| Cash Paid for Income Taxes: | |||||
| U.S. federal | $ | — | |||
| U.S. state and local | 0.9 | ||||
| Non-U.S. | |||||
| Chile | 2.0 | ||||
| Costa Rica | 1.4 | ||||
| Guatemala | 3.4 | ||||
| Mexico | 3.3 | ||||
| Saudi Arabia | 3.0 | ||||
| Other foreign jurisdictions | 4.2 | ||||
| Total | $ | 18.2 | |||
Deferred income tax assets and liabilities consisted of the following (U.S. dollars in millions):
| December 26, 2025 | December 27, 2024 | |||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Allowances and other accrued liabilities | $ | (2.0) | $ | (0.5) | ||||||||||
| Inventories | (16.0) | (16.8) | ||||||||||||
| Property, plant and equipment | (65.1) | (69.8) | ||||||||||||
| Equity in earnings of unconsolidated companies | (6.0) | (2.7) | ||||||||||||
| Pension obligations | (3.1) | (2.7) | ||||||||||||
| Other noncurrent deferred tax liabilities | (27.1) | (26.8) | ||||||||||||
| ROU assets | (24.8) | (17.8) | ||||||||||||
| Total noncurrent deferred tax liabilities | $ | (144.1) | $ | (137.1) | ||||||||||
| Deferred tax assets: | ||||||||||||||
| Allowances and other accrued assets | $ | 21.3 | $ | 19.0 | ||||||||||
| Inventories | 3.1 | 6.2 | ||||||||||||
| Pension obligations | 26.6 | 23.2 | ||||||||||||
| Property, plant and equipment | 3.1 | 2.9 | ||||||||||||
| Post-retirement benefits other than pension | 0.9 | 2.8 | ||||||||||||
| Net operating loss carryforwards | 418.1 | 408.0 | ||||||||||||
| Capital loss carryover | 4.1 | 3.2 | ||||||||||||
| Other noncurrent assets | 123.6 | 124.5 | ||||||||||||
| Operating lease | 28.4 | 19.4 | ||||||||||||
| Total noncurrent deferred tax assets | 629.2 | 609.2 | ||||||||||||
| Valuation allowance | (518.8) | (499.8) | ||||||||||||
| Total deferred tax assets, net | 110.4 | 109.4 | ||||||||||||
| Net deferred tax liabilities | $ | (33.7) | $ | (27.7) | ||||||||||
The valuation allowance increased by $19.0 million in 2025. The increase in 2025 relates primarily to valuation allowance on additional net operating loss carryforwards combined with the effect of a change in judgment about our ability to realize deferred tax assets in future years, due to our current and foreseeable operations.
At December 26, 2025, we are no longer permanently reinvested on certain foreign earnings. Accordingly, there is a deferred tax liability of $0.9 million as of December 26, 2025 related to the foreign earnings which are not considered to be permanently reinvested. Additionally, the undistributed earnings of our foreign subsidiaries amounted to $625.5 million. Those earnings are considered to be either indefinitely reinvested, or the earnings could be distributed tax free. To the extent the earnings are considered indefinitely reinvested, determination of the amount of the unrecognized deferred tax liability is not practicable due to the complexities associated with its hypothetical calculation.
At December 26, 2025, we had approximately $1,640.2 million of federal and foreign tax operating loss carryforwards expiring as follows (U.S. dollars in millions):
| Expires: | |||||
| 2026 | $ | 3.5 | |||
| 2027 | 1.2 | ||||
| 2028 | 5.8 | ||||
| 2029 | 6.8 | ||||
| 2030 and beyond | 865.9 | ||||
| No expiration | 757.0 | ||||
| $ | 1,640.2 | ||||
A reconciliation of the beginning and ending amount of uncertain tax positions excluding interest and penalties is as follows (U.S. dollars in millions):
| December 26, 2025 | December 27, 2024 | December 29, 2023 | |||||||||||||||
| Beginning balance | $ | 4.7 | $ | 6.4 | $ | 6.1 | |||||||||||
| Gross increases - current-period tax positions | 2.1 | 0.5 | 1.2 | ||||||||||||||
| Settlements | — | (1.0) | (1.1) | ||||||||||||||
| Lapse of statute of limitations | (0.9) | (1.0) | — | ||||||||||||||
| Foreign exchange | — | (0.2) | 0.2 | ||||||||||||||
| Ending balance | $ | 5.9 | $ | 4.7 | $ | 6.4 | |||||||||||
We accrued $9.9 million in 2025 and $7.6 million in 2024, for uncertain tax positions, including interest and penalties that, if recognized would affect the effective income tax rate.
The tax years 2012-2024 remain subject to examination by taxing authorities throughout the world in major jurisdictions, such as Costa Rica, Luxembourg, Switzerland and the United States.
We classify interest and penalties on uncertain tax positions as a component of income tax expense in the Consolidated Statements of Operations. Accrued interest and penalties related to uncertain tax positions are $4.0 million and $2.8 million for December 26, 2025 and December 27, 2024, respectively and are included in other noncurrent liabilities.
In connection with the examination of the tax returns in three foreign jurisdictions, the taxing authorities have issued income tax deficiencies primarily related to transfer pricing aggregating approximately $260.6 million (including interest and penalties) for tax years 2012 through 2021. We strongly disagree with the proposed adjustments and have filed or intend to file a protest with each of the taxing authorities.
In one of the foreign jurisdictions, we are currently contesting tax assessments related to the 2012-2015 audit years and the 2016 audit year in both the administrative court and the judicial court. During 2019 and 2020, we filed actions contesting the tax assessment in the administrative office. Our initial challenge to each of these tax assessments was rejected, and we subsequently lost our appeals at the administrative court. We have subsequently filed actions to contest each of these tax assessments in the country’s judicial courts. In addition, we have filed a request for injunction to the judicial court to stay the tax authorities' collection efforts for these two tax assessments, pending final judicial decisions. The court granted our injunction with respect to the 2016 audit year, however denied our injunction with respect to the 2012-2015 audit years. We timely appealed the denial of the injunction, and on August 10, 2022 the appellate court overturned the denial and granted our injunction for the 2012-2015 audit years with a trial date set for July 4, 2025. During June 2025, we were notified of the hearing being suspended until further notice due to a pending constitutional remedy affecting a rule included in the arguments. Pursuant to local law, we registered real estate collateral with an approximate fair market value of $7.3 million in connection with the grant of the 2016 audit year injunction. This real estate collateral has a net book value of $3.8 million as of the year ended December 26, 2025. In addition, in connection with the grant of the 2012-2015 audit year injunction, we registered real estate collateral with an approximate fair market value of $30.6 million, and a net book value of $4.6 million as of the year ended December 26, 2025. The registration of this real estate collateral does not affect our operations in the country.
In the second foreign jurisdiction, the administrative court denied our appeal, and on March 4, 2020 we filed an action in the judicial court to contest the administrative court's decision. The case is still pending.
In the third foreign jurisdiction, we received tax assessments related to 2018-2021 audit years. We have filed objections contesting these assessments and have subsequently initiated appeals. Subsequent to December 26, 2025, we received an unfavorable decision related to the appeals. We will continue to contest these assessments and have pursued further appeal through the applicable appellate forum.
We will continue to vigorously contest the adjustments and to exhaust all administrative and judicial remedies necessary in all jurisdictions to resolve the matters, which could be a lengthy process.
We regularly assess the likelihood of adverse outcomes resulting from examinations such as these to determine the adequacy of our tax reserves. Accordingly, during the year ended December 26, 2025, we accrued $2.9 million based on our current evaluation of the proposed adjustments. There can be no assurance that these matters will be resolved in our favor, and an adverse outcome of either matter, or any future tax examinations involving similar assertions, could have a material effect on our financial condition, results of operations and cash flows.
Additionally, the European Union (EU) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development (OECD) Pillar Two Framework. Pursuant to the implementation dates prescribed in the Directive, the rules became effective for the Company for the 2025 fiscal year. A significant number of other countries are expected to also implement similar legislation with varying effective dates in the future. To date, the Company has determined that there is a global minimum tax liability of $2.8 million as a result of Pillar Two, as certain jurisdictions have satisfied the safe harbor test to mitigate any minimum tax under Pillar Two. The Company continues to monitor its jurisdictions for any legislative changes.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant 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 legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. For the year ended December 26, 2025, the impact of OBBBA on our consolidated financial statements is immaterial. We are continuing to evaluate the effects of OBBBA for provisions that become effective in future periods.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 24, 2025 | |
| 2023 | Feb 26, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 24, 2021 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 19, 2019 | |
| 2017 | Feb 20, 2018 | |
| 2016 | Feb 21, 2017 | |
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.