Entity information:
Income Taxes

We are an Alberta, Canada corporation. We conduct business and are taxed on profits earned in a number of jurisdictions around the world. Income taxes have been provided based on the laws and rates in effect in the countries in which operations are conducted or in which we are considered a resident for income tax purposes.

Our income (loss) before income taxes consisted of the following (in thousands):
 
December 31,
 
2016
 
2015
 
2014
Canada
$
(26,018
)
 
$
(39,121
)
 
$
9,696

United States
(39,811
)
 
(60,645
)
 
3,504

Other international
(52,184
)
 
(18,644
)
 
25,244

Income (loss) before taxes
$
(118,013
)
 
$
(118,410
)
 
$
38,444


 
Our income tax provision consisted of the following (in thousands):
 
December 31,
 
2016
 
2015
 
2014
Current:
 
 
 
 
 
Canada
$
(883
)
 
$
(1,809
)
 
$
1,153

United States
118

 
(375
)
 
(849
)
Other international
882

 
7,351

 
20,183

Total current
117

 
5,167

 
20,487

Deferred:
 

 
 

 
 

Canada
598

 
10,841

 
(691
)
United States
—

 
(8,526
)
 
2,660

Other international
(800
)
 
7,862

 
(5,448
)
Total deferred
(202
)
 
10,177

 
(3,479
)
Income tax provision
$
(85
)
 
$
15,344

 
$
17,008



Since we are taxable in a number of jurisdictions around the world, our effective tax rate, which is income tax expense as a percentage of pretax earnings, fluctuates from year to year based on the level of profits earned in these jurisdictions and the tax rates applicable to such profits.
 
The combined Canadian federal and Alberta provincial income tax rate was 26.4% for 2016 and 2015 and 25% for 2014.

A reconciliation of the statutory rate and the effective income tax rate is as follows:
 
Year Ended December 31,
 
2016
 
2015
 
2014
Tax expense (benefit) at statutory tax rate
(26.4
)%
 
(26.4
)%
 
25.0
 %
Effect of:
 
 
 
 
 
Tax rates applied to earnings not attributed to Canada
1.6

 
(2.6
)
 
13.7

U.S. state taxes
0.1

 
0.1

 
1.3

Non-deductible expenses
1.9

 
3.8

 
3.3

Foreign exchange adjustments
0.4

 
2.2

 
0.2

Change in valuation allowance
22.1

 
34.7

 
2.4

Research and development tax credits
(0.1
)
 
(0.7
)
 
(3.1
)
Change in uncertain tax positions and tax audit assessments
(0.3
)
 
(0.1
)
 
1.0

Other
0.6

 
2.0

 
0.4

Tax expense (benefit) at effective tax rate
(0.1
)%
 
13.0
 %
 
44.2
 %


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 basis as reported on our consolidated financial statements. The measurement of deferred tax assets and liabilities is based on enacted tax laws and rates currently in effect in the jurisdictions in which we have operations.

 
December 31,
 
2016
 
2015
Deferred tax assets:
 

 
 

Loss carryforwards
$
37,910

 
$
26,766

Accrued liabilities and reserves
7,885

 
9,612

Tax credit carryforwards
3,937

 
3,526

Property, plant and equipment
18,572

 
14,005

Stock compensation
2,096

 
1,756

Intangibles
3,887

 
4,432

Deferred tax assets
74,287

 
60,097

Less: Valuation allowance
(66,143
)
 
(47,063
)
Total deferred tax assets
$
8,144

 
$
13,034

Deferred tax liabilities:
 

 
 

Property, plant and equipment
(8,147
)
 
(13,309
)
Intangible assets
(193
)
 
(306
)
Other
(210
)
 
(409
)
Total deferred tax liabilities
$
(8,550
)
 
$
(14,024
)
Net deferred tax assets (liabilities)
$
(406
)
 
$
(990
)


For the year ended December 31, 2016, we generated net operating losses in Canada, U.S. and other international jurisdictions. In Canada, we are able to carry a portion of these losses back to previous years to offset prior year income and generate tax refunds of $0.9 million. The remainder of the net operating losses are carried forward. As of December 31, 2016, we had $120.0 million of gross net operating loss carryforwards in Canada and the U.S. These carryforwards will start expiring in 2035. We also had another $25.8 million of gross net operating loss carryforwards in other international jurisdictions that have a carryforward life between 5 years to non-expiring. As of December 31, 2016, we had $3.9 million of various tax credit carryforwards in Canada and the U.S. We have recorded a valuation allowance on the net deferred tax assets, since it is more likely than not that future income necessary to utilize these carryforwards will not be realized.

No provision is made for taxes that may be payable on the repatriation of accumulated earnings in international subsidiaries of $93.5 million on the basis that these earnings will continue to be used to finance the activities of these subsidiaries. It is not practicable to determine the amount of unrecognized deferred income taxes associated with these unremitted earnings.

At December 31, 2015, we had an accrual for uncertain tax positions of $1.5 million. During 2016, we reduced our accrual by $0.8 million in uncertain tax positions for prior year as we effectively settled the related examinations with no payment of tax, leaving a balance of $0.7 million at December 31, 2016. Out of the $0.7 million, $0.2 million is included in a current liability, as we expect resolution within the next twelve months. The remaining $0.5 million is included in long term liabilities. The total amount of the $0.7 million unrecognized tax benefits that, if recognized, would affect the effective tax rate is $0.7 million.

A reconciliation of the beginning and ending accrual for uncertain tax positions is as follows (in thousands): 
 
December 31,
 
2016
 
2015
 
2014
Balance, beginning of year
$
1,475

 
$
2,553

 
$
1,904

Decreases in tax positions for prior years
(451
)
 
(994
)
 
—

Increase in tax positions for prior years
—

 
—

 
556

Increase in tax positions for current year
—

 
94

 
299

Lapse in statute of limitations
(310
)
 
(178
)
 
(206
)
Balance, end of year
$
714

 
$
1,475

 
$
2,553



Interest related to uncertain tax positions is recognized in interest expense and penalties related to uncertain tax positions are recognized in other expense on our consolidated statements of income. At December 31, 2016 and 2015, we had accrued $0.1 million for the potential payment of interest and penalties on uncertain tax positions.

We are subject to Canadian federal and provincial income tax and have concluded substantially all Canadian federal and provincial tax matters for tax years through 2008. We are also subject to U.S. federal and state income tax and have concluded substantially all U.S. federal income tax matters for tax years through 2012.

In addition to the material jurisdictions above, other state and international tax filings remain open to examination. We believe that any assessment on these filings will not have a material impact on our consolidated financial position, results of operations or cash flows. We believe that appropriate provisions for all outstanding issues have been made for all jurisdictions and all open years. However, audit outcomes and the timing of audit settlements are subject to significant uncertainty. Therefore, additional provisions on tax-related matters could be recorded in the future as revised estimates are made or the underlying matters are settled or otherwise resolved.