For 2019, the Company will determine its tax expense by estimating an annual effective income tax rate based on current and forecasted business results and enacted tax laws on a quarterly basis and apply this tax rate to the Company’s ordinary income or loss to calculate its estimated tax expense or benefit. The tax effect of discrete items are recognized in the period in which they occur at the applicable statutory tax rate.

The income tax provision for VAALCO consists primarily of Gabonese and United States income taxes. The Company’s operations in other foreign jurisdictions have a 0% effective tax rate because the Company has incurred losses in those countries and have full valuation allowances against the corresponding net deferred tax assets.

Provision for income taxes related to income (loss) from continuing operations consists of the following:

The Company’s effective tax rate for the three and six months ended June 30, 2019 is 79%. For the three and six months ended June 30, 2018, the Company recorded tax expense using the actual tax rate. For the three and six months ended June 30, 2019, the Company’s overall effective tax rate was impacted by non-deductible items associated with operations and deducting foreign taxes rather than crediting them for United States tax purposes. Additionally, the joint venture owners’ audit settlement was treated as discrete to the quarter and for which only an income tax benefit at the U.S. tax rate of 21% was provided.

The Company files income tax returns in all jurisdictions where such requirements exist, with Gabon and the United States being its primary tax jurisdictions.