Weatherford International plcWFRD
Weatherford International plc Income Taxes Disclosure
17 – Income Taxes
We provide for income taxes based on the laws and rates in effect in the countries in which operations are conducted, or in which we or our subsidiaries are considered resident for income tax purposes. The relationship between our pre-tax income or loss and our income tax provision or benefit varies from period to period as a result of various factors which include changes in total pre-tax income or loss, the jurisdictions in which our income is earned, the tax laws in those jurisdictions and in our operating structure.
Our income tax provision consisted of the following:
| Year Ended December 31, | |||||||||||
| (Dollars in millions) | 2025 | 2024 | 2023 | ||||||||
| Total Current Provision | $ | (111) | $ | (181) | $ | (143) | |||||
| Total Deferred (Provision) Benefit | 14 | (8) | 86 | ||||||||
| Income Tax Provision | $ | (97) | $ | (189) | $ | (57) | |||||
The difference between the Irish income tax provision and the consolidated income tax provision is analyzed below. During the fourth quarter of 2025, we adopted ASU 2023-09 (see "Note 1 Summary of Significant Accounting Policies" for further discussion on ASU 2023-09) on a prospective basis. As such, we have updated income tax disclosure presentations as of and for the year ended December 31, 2025 in order to comply with ASU 2023-09, but have not retrospectively applied these presentational changes to any of the prior periods presented. This adoption of ASU 2023-09 resulted in presentational differences of our income tax disclosures and did not result in a change to the calculations of our income before income taxes, current tax expense, deferred tax expense or effective tax rates for the year ended December 31, 2025. The Company is domiciled in Ireland and is subject to Ireland corporate income tax. In addition, we are subject to other income taxes, including those in the U.S. and in various foreign jurisdictions. Our consolidated effective tax rate reconciliation for the year ended December 31, 2025 is summarized below (in millions, except percentages):
Year Ended December 31, | ||||||||
| (Dollars in millions) | 2025 | |||||||
Irish Income Tax Provision Tax Rate of 25% | $ | (138) | 25.0 | % | ||||
State and Local Income Taxes, net of federal income tax effect | ||||||||
Foreign Tax Effects | ||||||||
Angola | (9) | 1.7 | % | |||||
Argentina | ||||||||
Changes in valuation allowances | 16 | (2.9) | % | |||||
Other | (8) | 1.4 | % | |||||
Bermuda | ||||||||
Statutory tax rate difference | (12) | 2.2 | % | |||||
Changes in valuation allowances | (18) | 3.3 | % | |||||
Iraq | ||||||||
Changes in valuation allowances | 9 | (1.7) | % | |||||
Other | (11) | 2.1 | % | |||||
Saudi Arabia | 8 | (1.5) | % | |||||
Switzerland | ||||||||
Statutory tax rate difference | 43 | (7.9) | % | |||||
Changes in valuation allowances | 22 | (4.0) | % | |||||
Other | 3 | (0.5) | % | |||||
United Arab Emirates | ||||||||
Statutory tax rate difference | (9) | 1.5 | % | |||||
Other | 1 | (0.1) | % | |||||
United States | ||||||||
Changes in valuation allowances | 9 | (1.7) | % | |||||
Other | 2 | (0.4) | % | |||||
Other foreign jurisdictions | (22) | 4.1 | % | |||||
Effect of cross border tax laws | (2) | 0.4 | % | |||||
Changes in valuation allowances | (9) | 1.6 | % | |||||
Nontaxable or nondeductible items | (6) | 1.2 | % | |||||
Changes in unrecognized tax benefits | 34 | (6.3) | % | |||||
Income Tax Provision | $ | (97) | 17.5 | % | ||||
| Year Ended December 31, | ||||||||
| (Dollars in millions) | 2024 | 2023 | ||||||
Irish Income Tax Provision Tax Rate of 25% | $ | (185) | $ | (126) | ||||
| Tax Provision on Operating Earnings/Losses Subject to Rates Different than the Irish Income Tax Rate | (75) | 52 | ||||||
Tax (Provision) Benefit on Swiss Loss from internal liquidation of subsidiary and internal restructuring | — | 2 | ||||||
Decrease (Increase) in Valuation Allowance on Operating Earnings/Losses | 81 | 35 | ||||||
| Change in Uncertain Tax Positions | (10) | (20) | ||||||
| Income Tax Provision | $ | (189) | $ | (57) | ||||
Our income tax provisions generally do not correlate to our consolidated income (loss) before tax. Our income tax provisions are primarily driven by profits in certain jurisdictions, deemed profit countries and withholding taxes on intercompany and third-party transactions that do not directly correlate to ordinary income or loss. Certain charges and impairments recognized do not result in significant tax benefit as a result of being attributed to a non-income tax jurisdiction or our inability to forecast realization of the tax benefit of such losses.
For the year ended December 31, 2025, income tax expense was lower than 2024, primarily driven by the lower earnings and the release of $70 million in benefits from previously uncertain tax positions due to audit settlements and lapses in the statute of limitations, partially offset by a decrease in the amount of valuation allowance releases as compared to 2024. During the year ended December 31, 2024, income tax expense was primarily driven by increased activity and operating profits, profit mix in various jurisdictions that we operate and lower valuation allowance releases. During the year ended December 31, 2023, income tax expense includes a one-time benefit of $115 million, due to the release of valuation allowances and the recognition of benefits from previously uncertain tax positions. Those benefits were offset by the establishment of valuation allowance of approximately $50 million against the sale of Blue Chip Swap securities and currency devaluation in Argentina (see Note 18 – Blue Chip Swap Securities - Argentina).
Deferred tax assets and liabilities are recognized for the estimated future tax effects of temporary differences between the tax basis of an asset or liability and its reported amount in the Consolidated Financial Statements. The measurement of deferred tax assets and liabilities is based on enacted tax laws and rates currently in effect in each of the jurisdictions in which we have operations.
The components of the net deferred tax asset were as follows:
| December 31, | December 31, | |||||||
| (Dollars in millions) | 2025 | 2024 | ||||||
| Deferred Tax Assets: | ||||||||
| Net Operating Losses Carryforwards | $ | 605 | $ | 585 | ||||
| Unused Recognized Built in Losses | 47 | 47 | ||||||
| Accrued Liabilities and Reserves | 63 | 138 | ||||||
| Tax Credit Carryforwards | 17 | 13 | ||||||
| Employee Benefits | 30 | 29 | ||||||
| Property, Plant and Equipment | 102 | 109 | ||||||
| Inventory | 34 | 34 | ||||||
| U.S. Interest Deferral | 57 | 58 | ||||||
Tax Base Adjustment | 52 | 53 | ||||||
| State Deferred | 60 | 57 | ||||||
| Other Differences between Financial and Tax Basis | 162 | 142 | ||||||
| Valuation Allowance | (1,057) | (1,122) | ||||||
| Total Deferred Tax Assets | 172 | 143 | ||||||
| Deferred Tax Liabilities: | ||||||||
| Intangible Assets | (23) | (17) | ||||||
| Other Differences between Financial and Tax Basis | (22) | (22) | ||||||
| Total Deferred Tax Liabilities | (45) | (39) | ||||||
| Net Deferred Tax Asset | $ | 127 | $ | 104 | ||||
We record deferred tax assets for net operating losses and temporary differences between the book and tax basis of assets and liabilities that are expected to produce tax deductions in future periods. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income in the appropriate tax jurisdiction during the periods in which those deferred tax assets would be deductible. The Company assesses the realizability of its deferred tax assets each period by considering whether it is more likely than not that all or a portion of the deferred tax assets will not be realized. The Company considers all available evidence (both positive and negative) when determining whether a valuation allowance is required, with emphasis on our past operating results, the existence of cumulative losses in the most recent years and our forecast of near- term taxable income. The Company evaluates possible sources of taxable income that may be available to realize the benefit of
deferred tax assets, including projected future taxable income, the reversal of existing temporary differences, taxable income in carryback years and available tax planning strategies, in making this assessment.
The valuation allowance decreased by $65 million in 2025. The decrease is primarily driven by $24 million of remeasurement of net deferred tax assets and $12 million due to the release of valuation allowances where deferred tax assets are now considered more likely than not to be realized in the future. The remaining net decrease in the valuation allowance during the year relates to the movement in our underlying valued net deferred tax assets based on current year activity as well as changes attributable to foreign currency translation.
Deferred income taxes generally have not been recognized on the cumulative undistributed earnings of our non-Irish subsidiaries because they are considered to be indefinitely reinvested. Distribution of these earnings in the form of dividends or otherwise may result in a combination of income and withholding taxes payable in various countries. Due to complexities in the tax laws and the manner of repatriation, it is not practicable to estimate the unrecognized amount of deferred income taxes and the related dividend withholding taxes associated with these undistributed earnings.
At December 31, 2025, we had approximately $3.1 billion of net operating losses (“NOLs”) in various jurisdictions. Our non-indefinite loss carryforwards, which are limited by Internal Revenue Code section 382 and total $0.4 billion as of December 31, 2025, and if not utilized, will mostly expire for U.S. subsidiaries from 2035 through 2036. Our non-indefinite loss carryforwards for our non-US subsidiaries will mostly expire at various dates from 2026 through 2044.
In 2021, we executed a liquidation transaction of one of our Swiss holding companies which resulted in the forfeiture of impairment losses of $1.3 billion generated in 2020. In addition, the liquidation transaction resulted in approximately $5.6 billion of tax losses (NOLs) in Switzerland, of which $2.7 billion was deemed worthless and is not included in the deferred tax table as of December 31, 2025.
A tabular reconciliation of the total amounts of uncertain tax positions at the beginning and end of the period is as follows:
| Year Ended December 31, | |||||||||||
| (Dollars in millions) | 2025 | 2024 | 2023 | ||||||||
| Balance at Beginning of Year | $ | 201 | $ | 203 | $ | 191 | |||||
| Additions for tax positions of prior periods | 7 | 7 | 9 | ||||||||
| Additions based on tax positions for the current period | 14 | 13 | 19 | ||||||||
| Reductions for tax positions of prior periods | (2) | (2) | (12) | ||||||||
| Reductions relating to settlements with taxing authorities | (33) | (5) | (3) | ||||||||
| Reductions due to a lapse of the statute of limitations | (15) | (8) | (6) | ||||||||
| Foreign Exchange Effects | 7 | (7) | 5 | ||||||||
| Balance at End of Year | $ | 179 | $ | 201 | $ | 203 | |||||
Substantially all of the uncertain tax positions, if released in future periods, would impact our effective tax rate. Within the total balance is $51 million and $48 million as of December 31, 2025 and 2024, respectively, that would be offset by net operating losses and other tax attributes if settled. Our income tax provision includes penalties and interest expense (benefit) on uncertain tax positions of $5 million, $1 million and $12 million for years ended December 31, 2025, 2024, and 2023, respectively. The expense of $5 million in 2025 includes $21 million of interest and penalty release related to benefit from previously uncertain tax positions. The amounts in the table above exclude cumulative accrued interest and penalties of $114 million and $112 million at December 31, 2025 and 2024, respectively, which are included in other non-current liabilities.
We are subject to income tax in many of the approximately 75 countries where we operate. We are continuously under tax examination in various jurisdictions and cannot predict the timing or outcome regarding the resolutions or if they will have a material impact on our financial statements. As of December 31, 2025, the following table summarizes the tax years that remain subject to examination for the major jurisdictions in which we operate:
| Tax Jurisdiction | Tax Years under Examination | ||||
| Argentina | 2017 - 2025 | ||||
| Canada | 2017 - 2025 | ||||
| Mexico | 2015 - 2025 | ||||
| Russia | 2022 - 2025 | ||||
| Saudi Arabia | 2006 - 2025 | ||||
| Switzerland | 2021 - 2025 | ||||
| United States (Federal) | 2021 - 2025 | ||||
The following table summarizes income taxes paid during the year ended December 31, 2025, net of refunds, by jurisdiction. Federal and state taxes paid did not meet the 5% disclosure threshold as required by ASU 2023-09. Cash taxes, net of refunds, were $168 million and $132 million for 2024 and 2023, respectively.
| (Dollars in millions) | 2025 | ||||
| Foreign | |||||
| Argentina | $ | 11 | |||
| Brazil | 14 | ||||
Mexico | 13 | ||||
Russia | 41 | ||||
Other | 78 | ||||
| Total | $ | 157 | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 4, 2026 | Showing above |
| 2024 | Feb 6, 2025 | |
| 2023 | Feb 7, 2024 | |
| 2022 | Feb 8, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Mar 16, 2020 | |
| 2018 | Feb 15, 2019 | |
| 2017 | Feb 14, 2018 | |
| 2016 | Feb 15, 2017 | |
| 2015 | Feb 16, 2016 | |
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.