StandardAero, Inc. Income Taxes Disclosure

NOTE 14: INCOME TAXES

Accumulated other comprehensive income at years ended December 31, 2025 and 2024, has been reported net of a $2.4 million deferred tax asset and a $3.5 million deferred tax asset, respectively.

The Company has the intent and ability to assert that undistributed foreign earnings are indefinitely or “permanently” reinvested outside the U.S. The Company is aware that there may be withholding taxes on an actual distribution of the undistributed foreign earnings. If the undistributed earnings were not considered permanently reinvested, deferred tax liabilities would have been provided for any applicable income taxes and withholding taxes payable in various countries, which would not be significant. A determination of the unrecognized deferred tax liabilities on the other outside basis differences reinvested indefinitely at December 31, 2025, is not practicable due to the complexities in the calculations.

The Company adopted ASU 2023-09 "Income Taxes (Topic 740): Improvements To Income Tax Disclosures" on a prospective basis beginning with the year ended December 31, 2025. The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory tax amount and rate to our actual global effective amount and rate for the year ended December 31, 2025:

The Company has adopted a position of indefinitely reinvesting earnings in its foreign operations. Despite the Company’s position of indefinitely reinvesting earnings in its foreign operations, the Tax Cuts and Jobs Act of 2017 made significant changes to the way U.S. multinationals’ foreign profits are taxed. GILTI was introduced as an outbound anti-base erosion provision.

In 2021, the Organization for Economic Cooperation and Development (“OECD”) released Pillar Two Global Anti-Base Erosion model rules (“Pillar Two Rules”), designed to ensure large corporations are taxed at a minimum rate of

15% in all countries of operation. On June 20, 2024, as part of Bill C-69, Canada enacted its Pillar Two legislation effective January 1, 2024. Canada Bill C-59 was also enacted on June 20, 2024, and included the excessive interest and financing expenses limitation (EIFEL) regime effective for tax years beginning on or after December 31, 2023. The Company has performed a quantitative and qualitative assessment and determined the effects are not materially significant to the 2024 and 2025 financial statements. The Company will continue to evaluate Pillar Two and EIFEL for their potential impact on future periods as further legislation is proposed or enacted.

On July 4, 2025 the One Big Beautiful Bill Act (the “OBBBA”), which includes a broad range of U.S. tax reform provisions, was signed into law by the President of the United States. The OBBBA includes significant provisions, such as (i) the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, (ii) modifications to the international tax framework, and (iii) the restoration of favorable tax treatment for certain business provisions. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. For the twelve month period ending December 31, 2025, the impact from the OBBBA provisions did not impact the effective tax rate; however, the OBBBA did have an impact on the deferred tax asset and liability balances for capitalized research & development, disallowed business interest expense and property, plant, and equipment. The Company will continue to evaluate the OBBBA provisions for their potential impact on future periods.

The total increase in valuation allowance was $2.6 million, $22.8 million and $31.9 million for the years ending December 31, 2025, 2024 and 2023, respectively. A “more likely than not” criterion is applied when evaluating the

realizability of a deferred tax asset. A valuation allowance of $120.2 million at December 31, 2025 and $117.7 million at December 31, 2024 has been recorded against the foreign net operating losses in various countries and U.S. Section 163(j) interest expense carryforwards as the Company has determined that it is more likely than not that the amount of the deferred tax assets will not be realized. A portion of the foreign losses may be carried forward indefinitely, as well as the U.S. Section 163(j) limitation. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, available taxes in the carryback periods, projected future taxable income and tax planning strategies in making this assessment.

As of December 31, 2025, unrecognized tax benefits related to prior year tax positions (including interest and penalties) were $5.8 million of which $5.8 million would affect the effective income tax rate if recognized. The Company’s policy is to recognize interest and penalties associated with uncertain tax positions as part of the provision for income taxes. As of December 31, 2025, accrued interest and penalties related to unrecognized tax benefits was approximately $2.0 million.

The following table represents a reconciliation of the unrecognized tax benefits, not including interest and penalties.

The Company files a U.S. federal income tax return as part of a consolidated group as well as income tax returns in various states and other foreign jurisdictions. The Company is open to examination in the United States. for 2019 onward, and Canada for 2021 onward. Generally, for the remaining tax jurisdictions, years from 2020 onward are still open to examination.