Income taxes (Tables)

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Provision for Income Taxes

The provision for taxes on income consists of:

(Dollars in Millions)	2023	2022	2021
Currently payable:
U.S. taxes	$2,705	2,274	1,338
International taxes	3,090	2,295	2,069
Total currently payable	5,795	4,569	3,407
Deferred:
U.S. taxes	(3,440)	(1,990)	565
International taxes	(619)	410	(2,595)
Total deferred	(4,059)	(1,580)	(2,030)
Provision for taxes on income	$1,736	2,989	1,377

Comparison of Income Taxes at Statutory Rate and Company's Effective Tax Rate

A comparison of income tax expense at the U.S. statutory rate of 21% in fiscal years 2023, 2022 and 2021, to the Company’s effective tax rate is as follows:

(Dollars in Millions)	2023		2022	2021
U.S.	$(2,033)		4,606	4,275
International	17,095		14,753	14,903
Earnings before taxes on income:	$15,062		19,359	19,178
Tax rates:
U.S. statutory rate	21.0	%	21.0	21.0
International operations(1)	(8.1)		(5.0)	(19.1)
U.S. Tax Settlements	(3.0)		—	—
U.S. taxes on international income(2)	(0.3)		(1.1)	8.9
Tax benefits from loss on capital assets	—		—	(1.6)
Tax benefits on share-based compensation	(0.8)		(1.4)	(1.2)
All other	2.7		1.9	(0.8)
Effective Rate	11.5	%	15.4	7.2

(1)International operations reflect the impacts of operations in jurisdictions with statutory tax rates different than the U.S., particularly Ireland, Switzerland, Belgium and Puerto Rico, which is a favorable impact on the effective tax rate as compared with the U.S. statutory rate.

(2)Includes the impact of the GILTI tax, the Foreign-Derived Intangible Income deduction and other foreign income that is taxable under the U.S. tax code. The 2023 and 2022 amount includes the impact of certain provisions of the 2017 TCJA that became effective in fiscal 2022. The 2023 amount includes the impact of certain foreign subsidiaries deferred tax remeasurements for legislative elections and the 2021 amounts include the reorganization of international subsidiaries further described below.

Temporary Differences and Carryforwards

Temporary differences and carryforwards at the end of fiscal years 2023 and 2022 were as follows:

	2023 Deferred Tax		2022 Deferred Tax
(Dollars in Millions)	Asset	Liability	Asset	Liability
Employee related obligations	$586		685
Stock based compensation	686		632
Depreciation of property, plant and equipment		(902)		(845)
Goodwill and intangibles		(1,252)		(1,737)
R&D capitalized for tax	3,595		2,611
Reserves & liabilities	3,816		2,733
Income reported for tax purposes(1)	359		2,026
Net realizable operating loss carryforwards(2)	996		1,319
Undistributed foreign earnings	1,801	(1,695)	1,517	(1,604)
Global intangible low-taxed income		(2,731)		(3,628)
Miscellaneous international	831		861	(66)
Miscellaneous U.S.		(4)	452
Total deferred income taxes	$12,670	(6,584)	12,836	(7,880)

(1)In fiscal 2023, the Company changed the presentation of income taxes accrued on intercompany profits on inventory still owned by the Company as part of “Prepaid expenses and other” on the Consolidated Balance Sheet.

(2)Net of valuation allowances of $1.1 billion and $0.8 billion in 2023 and 2022. The change in the valuation allowance from 2022 to 2023 was driven by approximately $0.1 billion from acquisition related activity and the remainder was due to normal operations during the fiscal year.

Summary of Activity Related to Unrecognized Tax Benefits

The following table summarizes the activity related to unrecognized tax benefits for continuing operations:

(Dollars in Millions)	2023	2022	2021
Beginning of year	$3,716	3,210	3,260
Increases related to current year tax positions	239	523	242
Increases related to prior period tax positions	244	143	23
Decreases related to prior period tax positions	(781)	(148)	(128)
Settlements	(880)	(1)	(187)
Lapse of statute of limitations	(53)	(11)	—
End of year	$2,485	3,716	3,210