The Company is subject to taxation in the Russian Federation, Kazakhstan, Kyrgyzstan, Cyprus, Ukraine, Uzbekistan, Germany and the United States of America.

The tax rates used for deferred tax assets and liabilities for the nine months ended December 31, 2018 and 2017, is 25% and 21%, respectively for the US, 20% for the Russian Federation, Kazakhstan, Kyrgyzstan, Ukraine and Uzbekistan, 31% for Germany and 12.5% for Cyprus.

Deferred tax assets and liabilities of the Company are comprised of the following:

During the nine months ended December 31, 2018 and 2017, the effective tax rate was equal to 19.09% and 2.45%, respectively. The change in effective tax rate was primarily due to earned revenue from commission income of Freedom CY, taxable in Cyprus at a tax rate of 12.5%, and due to unrecognized tax loss carryforwards on FRHC. During the nine months ended December 31, 2017, the effective tax rate was primarily impacted due to non-taxable gains on trading securities in Freedom KZ in the amount of $26,010.

During the nine months ended December 31, 2018, the Company realized net gain before income tax of $5,285, primarily from earned revenue from commission income of Freedom CY in the amount of $13,563, taxable in Cyprus at a tax rate of 12.5%. This gain was offset by operating expenses of Freedom KZ and FRHC that have unrecognized tax losses carryforward. This resulted in the Company realizing an income tax expense during the nine months ended December 31, 2018, of $1,009. During the nine months ended December 31, 2017, the Company realized net income before income tax of $22,486, primarily from non-taxable revenues generated from Freedom KZ’s trading operations.

During the three months ended December 31, 2018 and 2017, the effective tax rate was equal to 5.77% and 2.98%, respectively. The increase in effective tax rate was primarily due to earned revenue from commission income of Freedom CY, taxable in Cyprus at a tax rate of 12.5% and due to unrecognized tax loss carryforwards on FRHC.

During the three-month period ended December 31, 2018, the Company realized net gain before income tax of $9,445, primarily from earned revenue from commission income of Freedom CY in the amount of $5,900, taxable in Cyprus at a tax rate of 12.5% and from non-taxable revenue generated from Freedom KZ trading operations. These gains were offset by operating expenses of Freedom KZ and FRHC that have unrecognized tax losses carryforward. This resulted in the Company realizing an income tax expense during the three months ended December 31, 2018, of $545. During the three months period ended December 31, 2017, the Company realized net loss before income tax of $13,881, primarily from non-taxable revenues generated from Freedom KZ’s trading operations resulting in an income tax benefit of $413.