Income Taxes (Notes)
|6 Months Ended|
Mar. 28, 2021
|Income Tax Disclosure [Abstract]|
|Income Taxes||Income Taxes
We estimate our annual effective income tax rate to be 12% for fiscal 2021, which is lower than the U.S. federal statutory rate, primarily due to a significant portion of our income qualifying for preferential treatment as foreign-derived intangible income (FDII) at a 13% effective tax rate, benefits from our federal research and development tax credit and excess tax benefits associated with share-based awards. The effective tax rate of 17% for the second quarter of fiscal 2021 was higher than the estimated annual effective tax rate of 12% primarily due to $87 million of discrete net tax charges recorded in the second quarter of fiscal 2021, which principally related to a tax audit settlement with the Internal Revenue Service and foreign currency losses on a noncurrent receivable related to our refund claim of Korean withholding tax. The effective tax rate of 22% for the second quarter of fiscal 2020 included $28 million of discrete net tax charges recorded in the second quarter of fiscal 2020, which principally related to foreign currency losses on a noncurrent receivable related to our refund claim of Korean withholding tax.
Unrecognized tax benefits were $2.0 billion and $1.9 billion at March 28, 2021 and September 27, 2020, respectively, and primarily related to our refund claim of Korean withholding tax. If successful, the refund will result in a corresponding reduction in U.S. foreign tax credits. We expect that the total amount of unrecognized tax benefits at March 28, 2021 will increase in the next 12 months as licensees in Korea continue to withhold taxes on future payments due under their licensing agreements at a rate higher than we believe is owed; such increase is not expected to have a significant impact on our income tax provision.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef