MIME 2017 Annual Report

86 The reconciliation of the United Kingdom statutory tax rate to the Company’s effective tax rate included in the accompanying consolidated statements of operations is as follows: Year ended March 31, 2018 2017 2016 Tax at statutory rate 19.0% 20.0% 20.0% U.S. state taxes, net of federal 14.1 (1.0) (1.9) Foreign rate differential 36.8 (39.3) 18.0 Meals and entertainment (3.1) (7.4) (7.9) Branch income / loss 0.4 0.9 0.3 Share-based compensation 105.3 (4.0) (7.3) Foreign exchange — (24.8) 7.4 Non-deductible interest expense — (3.3) (13.9) Tax credits 8.1 15.6 7.9 Unremitted earnings (1.2) — — Change in valuation allowance (110.7) 124.7 48.1 Deferred tax true-ups 8.4 (12.4) (61.0) Tax reserves (21.5) (117.7) (23.8) Provision to return 0.4 (0.7) (6.5) Withholding taxes (3.5) — — Other foreign taxes — (6.7) — Non-deductible expenses (2.4) (10.6) (3.9) Deferred tax rate change (77.8) (1.3) (12.8) Other (0.2) — 0.9 Effective Tax Rate (27.9)% (68.0)% (36.4)% Although the Company’s parent entity is organized under Jersey law, our affairs are, and are intended to be, managed and controlled ongoing in the United Kingdom. Therefore, the Company is resident in the United Kingdom for tax purposes. The Company’s parent entity is domiciled in the United Kingdom and its earnings are subject to 19%, 20% and 20% statutory tax rate for the years ended March 31, 2018, 2017 and 2016, respectively. The Company’s effective tax rate differs from the statutory rate each year primarily due to windfall tax benefits on equity award exercises, the valuation allowance maintained against the Company’s net deferred tax assets, the effect of tax rate changes primarily related to the U.S. Tax Cuts and Jobs Act enacted during the third quarter 2018, the jurisdictional earnings mix, tax reserves for uncertain tax positions, tax credits, withholding taxes, and other permanent differences primarily related to non-deductible expenses.