A rate reconciliation (RR) is a calculation prepared in the determination of arriving at an effective tax rate for Federal purposes. It has several parts to the formula. It begins with a statutory tax rate, which is the equivalent rate before applying income taxes. Then other factors are plus or minus percentages from the statutory rate. These include Sate income taxes, net of the Federal tax benefit; International rate differential; Rate variances arising from foreign subsidiary distributions; Resolution of prior period tax matters; and other net items. As you can see, this rate reconciliation is used by international companies.