KLAC · 10-Q · 2026Q3 · Full report

Income Tax Rate Changes

KLA CORP · 2026-10-29 · Importance 45 · Surprise 50 · From source text

Q1 FY27 effective tax rate was 15.1%, compared with 12.0% in Q4 FY26 and 14.4% in Q1 FY26. The sequential increase reflected lower tax benefits from stock-based compensation and the OECD Pillar Two Undertaxed Profits Rule (UTPR) provision. KLA recorded $20.2 million of UTPR tax expense in the quarter and expects $94.5 million of UTPR expense for fiscal 2027. The company noted that UTPR expense could be reversed without payment as countries enact the Side-by-Side Safe Harbor.

Key facts

• KLA expects $94.5 million of tax expense in fiscal 2027 relating to the UTPR provision and accrued $20.2 million of that expense in the three months ended September 30, 2026. source
• KLA's UTPR tax expense may be reversed without payment as countries enact legislation to adopt the Side-by-Side Safe Harbor. source
• KLA's effective tax rate was 15.1% in the three months ended September 30, 2026, compared with 12.0% in the three months ended June 30, 2026. source
• KLA's effective tax rate increased sequentially primarily because of reduced tax effects of stock-based compensation expense and the tax effects of the OECD Pillar Two UTPR provision. source
• KLA's effective tax rate was 15.1% in the three months ended September 30, 2026, compared with 14.4% in the three months ended September 30, 2025. source
• KLA's year-over-year effective tax rate increase was primarily due to the tax effects of the OECD Pillar Two GloBE UTPR provision in the three months ended September 30, 2026. source

Impact estimates