What is the difference between the effective tax rate (ETR) and the statutory tax rate?

The legal tax rate set by the country / jurisdiction. It varies widely — roughly 21–30% across major developed markets (a ~25–30% marginal corporate rate is common, and combined national-plus-local rates differ by location). Effective tax rate: taxes actually paid / EBT per the income statement — can differ significantly. ETR = income-statement taxes / pre-tax income. Reasons for the divergence:

• Tax-exempt income (equity-method / investment income, some capital gains).
• Non-deductible expenses (goodwill impairment, some fines, partly deductible meals/entertainment).
• Mix of foreign subsidiaries with different tax rates.
• Tax credits (R&D incentives, investment credits).
• Changes in the DTA recoverability test.
• Loss carryforward utilization. In IB modeling: use the ETR from the last 3 years as a forecast base; where there are large one-off effects, use a 'normalized ETR'.