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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of Earnings Before Income Taxes and Provision For Income Taxes

Earnings before income taxes and provision for income taxes consisted of the following for the years ended December 31, 2021, 2020 and 2019:


(in millions)	2021		2020		2019
Earnings before income taxes	$	12,232	$	10,953	$	9,872
Provision for income taxes:
United States federal and state:
Current	$	73	$	(80)	$	17
Deferred	27		53		24
Total United States	100		(27)		41
Outside United States:
Current	2,616		2,600		2,417
Deferred	(45)		(196)		(165)
Total outside United States	2,571		2,404		2,252
Total provision for income taxes	$	2,671	$	2,377	$	2,293

Schedule of Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:


(in millions)	2021		2020		2019
Balance at January 1,	$	72	$	63	$	56
Additions based on tax positions related to the current year	12		11		10
Additions for tax positions of previous years	15		1		1
Reductions for tax positions of prior years	(1)		(4)		(2)
Reductions due to lapse of statute of limitations	(3)		(1)		(1)
Settlements	—		—		—
Other	(6)		2		(1)
Balance at December 31,	$	89	$	72	$	63

Schedule of Unrecognized Tax Benefits and Liability for Contingent Income Taxes, Interest and Penalties

Unrecognized tax benefits and PMI’s liability for contingent income taxes, interest and penalties were as follows:


(in millions)	December 31, 2021		December 31, 2020		December 31, 2019
Unrecognized tax benefits	$	89	$	72	$	63
Accrued interest and penalties	18		17		16
Tax credits and other indirect benefits	(7)		(9)		(12)
Liability for tax contingencies	$	100	$	80	$	67

Schedule of Reasons Attributable to the Differences Between Effective Income Tax Rate and U.S. Federal Statutory Rate

The effective income tax rate on pre-tax earnings differed from the U.S. federal statutory rate for the following reasons for the years ended December 31, 2021, 2020 and 2019:


	2021		2020		2019
U.S. federal statutory rate	21.0	%	21.0	%	21.0	%
Increase (decrease) resulting from:
Foreign rate differences	(0.3)		0.6		1.8
Dividend repatriation cost	0.6		0.4		(0.5)

Global intangible low-taxed income	0.8		0.1		1.4
U.S. state taxes	0.2		0.2		0.7
Foreign derived intangible income	(0.7)		(0.6)		(1.2)
Other	0.2		—		—
Effective tax rate	21.8	%	21.7	%	23.2	%

Schedule of Temporary Differences of Tax Effects to Deferred Income Tax Assets and Liabilities

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


	At December 31,
(in millions)	2021		2020
Deferred income tax assets:
Accrued postretirement and postemployment benefits	$	234	$	225
Accrued pension costs	392		720
Inventory(1)	177		232
Accrued liabilities	168		182
Net operating loss carryforwards and tax credits	408		351

Foreign exchange	—		27
Other	112		124
Total deferred income tax assets	1,491		1,861
Less: valuation allowance	(239)		(250)
Deferred income tax assets, net of valuation allowance	1,252		1,611
Deferred income tax liabilities:
Trade names	(591)		(374)
Property, plant and equipment	(140)		(200)
Unremitted earnings	(206)		(311)
Foreign exchange	(146)		—
Total deferred income tax liabilities	(1,083)		(885)
Net deferred income tax assets	$	169	$	726

(1)Includes deferred tax charges of $153 million and $209 million in 2021 and 2020, respectively, related to intercompany transactions.