TTEC Holdings, Inc. Income Taxes Disclosure

(10)INCOME TAXES

The sources of pre-tax operating income are as follows (in thousands):

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The Company’s selection of an accounting policy with respect to both the GILTI and BEAT rules is to compute the related taxes in the period the entity becomes subject to either. A reasonable estimate of the effects of these provisions has been included in the 2025 annual financial statements.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, extending provisions of the 2017 Tax Cuts and Jobs Act. It does not have a material impact on the Company’s consolidated financial statements.

During the fourth quarter of 2023, the Company released its indefinite reinvestment assertion related to earnings for all foreign operations. As a result, in 2025, the Company recorded additional taxes of $2.5 million related to the earnings of its foreign subsidiaries as required. The Company generally intends to limit distributions from non-U.S. subsidiaries to cash balances available in foreign jurisdictions.

No additional income taxes have been provided for any remaining outside basis difference inherent in the Company’s foreign subsidiaries as these amounts continue to be indefinitely reinvested in foreign operations. The Company has an estimated $159 million of outside-basis differences as of December 31, 2025. Determination of any unrecognized deferred tax liability related to the outside-basis difference in investments in foreign subsidiaries is not practicable due to the inherent complexity of the multi-national tax environment in which the Company operates.

The components of the Company’s Provision for (benefit from) income taxes are as follows (in thousands):

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In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The Company adopted ASU 2023-09 effective January 1, 2025 on a prospective basis. Accordingly, the guidance has been applied only to current-year income tax disclosures, and comparative prior-year information has not been recast. The adoption did not have an impact on the Company’s consolidated financial position, results of operations, or cash flows, as the guidance relates solely to disclosure requirements.

The following two tables reconcile the Company’s effective tax rate to the federal statutory rate (in thousands):

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⁽¹⁾ The states and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include Texas.

Management has evaluated its foreign operations and determined that no individual foreign jurisdiction is significant to the Company’s consolidated financial statements.

The Company’s income taxes paid (net of refunds) is summarized as follows (in thousands):

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From the above amounts, income taxes paid (net of refunds) exceed the 5% of taxes paid threshold in the following foreign jurisdictions (in thousands):

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From the above amounts, states that equal more than 50% of our state income taxes paid (net of refunds) and exceed the 5% of taxes paid threshold include the following jurisdiction (in thousands):

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The Company’s deferred income tax assets and liabilities are summarized as follows (in thousands):

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Quarterly, the Company assesses the likelihood by jurisdiction that its net deferred tax assets will be recovered. Based on the weight of all available evidence, both positive and negative, the Company records a valuation allowance against deferred tax assets when it is more-likely-than-not that a future tax benefit will not be realized.

As of December 31, 2025 the Company had approximately $5.3 million deferred tax assets across their foreign operations. As of December 31, 2025 the deferred tax valuation allowance was $197.0 million related primarily to tax losses in jurisdictions which do not meet the “more-likely-than-not” standard under current accounting guidance.

When there is a change in judgment concerning the recovery of deferred tax assets in future periods, a valuation allowance is recorded into earnings during the quarter in which the change in judgment occurred. In 2025, the Company made adjustments to its deferred tax assets and corresponding valuation allowances. The net change to the valuation allowance consisted of the following: a $35.4 million increase in the United States, a $1.5 million increase in Australia, a $1.5 million increase in the Netherlands, and a $2.0 million increase in various other jurisdictions for deferred tax assets that do not meet the “more-likely-than-not” standard offset by a $0.6 million decrease of valuation allowances in New Zealand, and a $0.3 million decrease in Australia related to the utilization or write-off of deferred tax assets.

Activity in the Company’s valuation allowance accounts consists of the following (in thousands):

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As of December 31, 2025, after consideration of all tax loss carry back opportunities, the Company had tax affected tax loss carry forwards worldwide expiring as follows (in thousands):

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The Company has been granted “Tax Holidays” as an incentive to attract foreign investment by the governments of the Philippines and Costa Rica. Generally, a Tax Holiday is an agreement between the Company and a foreign government under which the Company receives certain tax benefits in that country, such as exemption from taxation on profits derived from export-related activities. In the Philippines, the Company has been granted multiple agreements under local laws which result in an overall reduced tax rate. These incentives have varying benefit year over year and expire at various times beginning in 2031. The aggregate benefit to income tax expense for the years ended December 31, 2025, 2024 and 2023 was approximately $3.0 million, $2.8 million and $2.3 million, respectively, which had a favorable impact on diluted net income (loss) per share of $0.06, $0.06 and $0.05, respectively.

Accounting for Uncertainty in Income Taxes

In accordance with ASC 740, the Company has recorded a reserve for uncertain tax positions. The total amount of interest and penalties recognized in the accompanying Consolidated Balance Sheets and Consolidated Statements of Comprehensive Income (Loss) as of December 31, 2025, 2024 and 2023 was approximately $0.1 million, $3.4 million and $2.7 million, respectively.

The Company had a reserve for uncertain tax benefits, on a net basis, of $0.2 million and $6.5 million for the years ended December 31, 2025 and 2024, respectively.

The tabular reconciliation of the reserve for uncertain tax benefits on a gross basis without interest for the three years ended December 31, 2025 is presented below (in thousands):

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At December 31, 2025, the amount of uncertain tax benefits including interest, that, if recognized, would reduce tax expense was $0.3 million.

The Company and its domestic and foreign subsidiaries (including Percepta LLC and its domestic and foreign subsidiaries) file income tax returns as required in the U.S. federal jurisdiction and various state and foreign jurisdictions. The following table presents the major tax jurisdictions and tax years that are open as of December 31, 2025 and subject to examination by the respective tax authorities:

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The Company’s U.S. income tax returns filed for the tax years ending December 31, 2021 to present, remain open tax years. The Company has been notified of the intent to audit, or is currently under audit of, income taxes for the Philippines for tax year 2023 and India for tax years 2017 through 2022. Although the outcome of examinations by taxing authorities are always uncertain, it is the opinion of management that the resolution of these audits will not have a material effect on the Company’s Consolidated Financial Statements.