Payoneer Global Inc. Income Taxes Disclosure

NOTE 23 - INCOME TAXES

The Company is subject to U.S. federal, state, and foreign income taxes. The components of income before income taxes for each of the years ended December 31, 2025, 2024 and 2023 were as follows:

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The components of the provision for income taxes for each of the years ended December 31, 2025, 2024 and 2023 were as follows:

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NOTE 23 - INCOME TAXES (continued):

A reconciliation of the statutory U.S. federal income tax rate of 21% for the year ended December 31, 2025 to the effective income tax rate is as follows:

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NOTE 23 - INCOME TAXES (continued):

As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the following is a reconciliation between the effective income tax rate and the federal statutory tax rate:

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Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of long-term assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the Company’s long-term net deferred tax assets were as follows:

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NOTE 23 - INCOME TAXES (continued):

Deferred taxes are determined utilizing the asset and liability method based on the estimated future tax effects of differences between the financial accounting and tax bases of assets and liabilities under the applicable tax laws. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. In evaluating the need for a valuation allowance, management takes into account various factors, including future reversals of existing taxable temporary differences, projected future taxable income by jurisdiction, tax planning strategies, and results of recent operations. Based on this evaluation, a valuation allowance of $19,359 and $19,180 has been recorded as of December 31, 2025 and 2024, respectively. As of December 31, 2025, the Company maintains a full valuation allowance on its deferred tax assets in Singapore, associated with the Skuad acquisition, and in Germany as management believes it is more likely than not that the deferred tax assets will not be utilized in these jurisdictions. In the determination of the appropriate valuation allowances, the Company has considered the most recent projections of future business results and taxable income by jurisdiction. Actual results may vary in comparison to current projections.

After consideration of the evidence described above, management believes it is more likely than not that deferred tax assets will be realized for the United States and the Israeli subsidiary.

As of December 31, 2025, the Company had state tax net operating loss carryforwards of $355. Though the Company’s state net operating loss carryforwards were insignificant as of December 31, 2025, these net operating losses can be utilized to reduce future taxable income, if any. Utilization of the net operating loss carryforwards may be subject to annual limitations under the tax laws of the different states. The annual limitation may result in the expiration of state net operating loss carryforwards before utilization. If not utilized, the state net operating loss carryforwards will begin to expire in 2029. The Company also has net operating losses in Germany of approximately $60,986, which may be carried forward indefinitely to offset future taxable income in Germany. It is more likely than not that the majority of the German net operating loss carryforwards will not be realized; therefore, the Company has recorded a valuation allowance against them.

Additionally, it should be noted that for the year ended December 31, 2025, provisions have not been made for income taxes on the undistributed earnings that were deemed permanently reinvested in foreign subsidiaries. Determination of the amount of unrecognized deferred tax liabilities on these earnings is not practicable because such liabilities, if any, depend on certain circumstances existing if and when remittance occurs. A deferred tax liability will be recognized if and when the Company no longer plans to permanently reinvest these undistributed earnings.

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NOTE 23 - INCOME TAXES (continued):

The below describes uncertain tax positions that would be recorded in the consolidated statements of comprehensive income as part of the income tax provision. A reconciliation of the beginning and ending amount of unrecognized tax benefits included in other non-current liabilities on the accompanying consolidated balance sheets of the Company is as follows:

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The material uncertain tax positions relate to transfer pricing adjustments in foreign jurisdictions. As of December 31, 2025, the Company recorded gross unrecognized tax benefits of $57,083, all of which, if recognized, would affect the Company’s effective tax rate. The Company recognizes interest and penalties accrued on uncertain income tax positions as part of the income tax provision. During the years ended December 31, 2025, 2024 and 2023, the Company incurred penalties related to income taxes of $1, $186, and $38, respectively.

The following table presents the change in the Company’s valuation allowance during the periods presented:

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Tax years from 2022 and forward remain open to examinations by US federal and state authorities. The Company is currently not under examination by the Internal Revenue Service. The Israeli subsidiary continues to be under tax examination for the 2021-2022 tax years. The Company will comply with the requests to the extent required by law.

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NOTE 23 - INCOME TAXES (continued):

Upon adoption of ASU 2023-09, as described in Note 2cc, cash paid for income taxes, net of refunds, during the year ended December 31, 2025, was as follows:

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Cash paid for income taxes, net of refunds was $52,320 and $40,910 for the years ended December 31, 2024 and 2023, respectively.