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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Earnings/(losses) from continuing operations before income taxes and the provision for income taxes consisted of:


	For the Years Ended December 31,
	2021		2020		2019
	(in millions)
Earnings/(losses) from continuing operations before income taxes:
United States	$	519	$	514	$	751
Outside United States	3,850		2,869		2,696
	$	4,369	$	3,383	$	3,447
Provision for income taxes:
United States federal:
Current	$	297	$	440	$	145
Deferred	(31)		(82)		97
	266		358		242
State and local:
Current	89		98		29
Deferred	9		(7)		45
	98		91		74
Total United States	364		449		316

Outside United States:
Current	599		756		459
Deferred	227		19		(773)
Total outside United States	826		775		(314)

Total provision for income taxes	$	1,190	$	1,224	$	2

Schedule of Effective Income Tax Rate Reconciliation

The effective income tax rate on pre-tax earnings differed from the U.S. federal statutory rate as follows:


	For the Years Ended December 31,
	2021	2020	2019
U.S. federal statutory rate	21.0%	21.0%	21.0%
Increase/(decrease) resulting from:
State and local income taxes, net of federal tax benefit	1.1%	1.6%	1.3%
Foreign rate differences	(1.6)%	1.1%	0.2%
Changes in judgment on realizability of deferred tax assets	0.1%	(2.2)%	(0.3)%
Reversal of other tax accruals no longer required	(0.5)%	(0.8)%	(3.0)%
Tax accrual on investment in KDP (including tax impact of share sales)	4.7%	6.7%	0.8%
Excess tax benefits from equity compensation	(0.7)%	(1.0)%	(1.2)%
Tax legislation (non-Swiss tax reform)	2.3%	1.0%	0.4%
Swiss tax reform	—	—	(22.3)%
Business sales (including tax impact from JDE Peet's transaction)	—	7.4%	—

Foreign tax provisions under TCJA (GILTI, FDII and BEAT) (1)	0.8%	1.1%	2.5%
Other	—	0.3%	0.7%
Effective tax rate	27.2%	36.2%	0.1%

(1) The Tax Cuts and Jobs Act of 2017 (“TCJA”) established the Global Intangible Low-Tax Income (“GILTI”) provision, which taxes U.S. allocated expenses and certain income from foreign operations; the Foreign-Derived Intangible Income (“FDII”) provision, which allows a deduction against certain types of U.S. taxable income resulting in a lower effective U.S. tax rate on such income; and the Base Erosion Anti-abuse Tax (“BEAT”), which is a minimum tax based on cross-border service payments by U.S. entities.

Schedule of Deferred Tax Assets and Liabilities Temporary Differences

Tax effects of temporary differences that gave rise to deferred income tax assets and liabilities consisted of:


	As of December 31,
	2021		2020
	(in millions)
Deferred income tax assets:
Accrued postretirement and postemployment benefits	$	114	$	137
Accrued pension costs	23		251
Other employee benefits	150		151
Accrued expenses	454		420
Loss carryforwards	685		648
Tax credit carryforwards	786		790
Other	468		535
Total deferred income tax assets	2,680		2,932
Valuation allowance	(1,280)		(1,277)
Net deferred income tax assets	$	1,400	$	1,655
Deferred income tax liabilities:
Intangible assets, including impact from Swiss tax reform	$	(3,214)	$	(2,951)
Property, plant and equipment	(638)		(747)
Other	(451)		(513)
Total deferred income tax liabilities	(4,303)		(4,211)
Net deferred income tax liabilities	$	(2,903)	$	(2,556)

Schedule of Changes in Unrecognized Tax Benefit

The changes in our unrecognized tax benefits were:


	For the Years Ended December 31,
	2021		2020		2019
	(in millions)
January 1	$	442	$	426	$	516
Increases from positions taken during prior periods	31		35		27
Decreases from positions taken during prior periods	(21)		(17)		(35)
Increases from positions taken during the current period	47		48		50
Decreases relating to settlements with taxing authorities	(13)		(27)		(64)
Reductions resulting from the lapse of the applicable statute of limitations	(26)		(29)		(64)
Currency/other	(14)		6		(4)
December 31	$	446	$	442	$	426