v3.25.0.1
Income Taxes:
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes:
Income Taxes:

Earnings before income taxes and provision for income taxes consisted of the following for the years ended December 31, 2024, 2023 and 2022:
(in millions)
202420232022
Earnings before income taxes
$12,199 $10,450 $11,634 
Provision for income taxes:
United States federal and state:
Current
$465 $201 $(75)
Deferred
(81)(368)(139)
Total United States
384 (167)(214)
Outside United States:
Current
2,668 2,468 2,553 
Deferred
(35)38 (95)
Total outside United States
2,633 2,506 2,458 
Total provision for income taxes
$3,017 $2,339 $2,244 

Changes in the tax laws of foreign jurisdictions could arise as a result of the Base Erosion and Profit Shifting project undertaken by the Organisation for Economic Co-operation and Development (“OECD”), which recommended changes to numerous long-standing tax principles. Many countries have enacted the OECD’s framework on a global minimum tax (referred to as “Pillar Two”), effective for taxable years beginning after December 31, 2023. PMI has determined that Pillar Two did not have a material impact on its 2024 consolidated financial statements.

At December 31, 2017, PMI recorded a one-time transition tax liability on its accumulated foreign earnings, which is payable over an eight-year period beginning in 2018. At December 31, 2023, $0.3 billion of PMI's remaining long-term portion of transition tax liability was recorded in "income taxes and other liabilities" on PMI's consolidated balance sheets. At December 31, 2024, PMI had no remaining long-term portion of transition tax liability as the final transition tax payment is anticipated to be made in the second quarter of 2025.
At December 31, 2024 and 2023, applicable U.S. federal income taxes have not been provided on approximately $1.6 billion and $0.6 billion, respectively, of accumulated earnings of Swedish Match U.S. subsidiaries that are expected to be permanently reinvested. PMI does not foresee a need to repatriate these earnings since its U.S. cash requirements are supported by distributions of earnings from PMI foreign entities that have not been designated as permanently reinvested and existing credit facilities. At December 31, 2024 and 2023, PMI has determined the amount of deferred tax liabilities related to these unremitted Swedish Match U.S. earnings was approximately $192 million and $71 million, respectively.

At December 31, 2024 and 2023, U.S. federal and foreign deferred income taxes have been provided on all accumulated earnings of PMI's foreign subsidiaries.

PMI is regularly examined by tax authorities around the world and is currently under examination in a number of jurisdictions. The U.S. federal statute of limitations on assessment remains open for the years 2019 and onward. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from 3 to 5 years after the filing of a return. Years still open to examination by foreign tax authorities in major jurisdictions include Germany (2018 onward), Indonesia (2019 onward), Italy (2019 onward), Russia (2021 onward) and Switzerland (2020 onward).

Subsidiaries of PMI in Indonesia, principally PT Hanjaya Mandala Sampoerna Tbk ("HMS"), have recorded income tax receivables in the amount of 4.0 trillion Indonesian rupiah (approximately $249 million) relating to corporate income tax assessments paid to avoid potential penalties, primarily for domestic and other intercompany transactions for the years 2015 to 2021. Objection letters have been filed with the Tax Office and these assessments are being challenged at various levels in court. These income tax receivables are included in other assets in PMI’s consolidated balance sheets at December 31, 2024 and 2023.

It is reasonably possible that within the next 12 months certain tax examinations will close, which could result in a change in unrecognized tax benefits along with related interest and penalties. An estimate of any possible change cannot be made at this time.

A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:
(in millions)
202420232022
Balance at January 1,$55 $72 $89 
Additions based on tax positions related to the current year
6 7 12 
Additions for tax positions of previous years
1 1 2 
Reductions for tax positions of prior years
— (23)(18)
Reductions due to lapse of statute of limitations
(2)(3)(6)
Settlements
— — (4)
Other
(4)1 (3)
Balance at December 31,$56 $55 $72 

Unrecognized tax benefits and PMI’s liability for contingent income taxes, interest and penalties were as follows:
(in millions)
December 31, 2024December 31, 2023December 31, 2022
Unrecognized tax benefits
$56 $55 $72 
Accrued interest and penalties
11 9 13 
Tax credits and other indirect benefits
(1)(1)(3)
Liability for tax contingencies
$66 $63 $82 

The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $56 million at December 31, 2024. The remainder, if recognized, would principally affect deferred taxes.

For the years ended December 31, 2024, 2023 and 2022, PMI recognized income (expense) in its consolidated statements of earnings of $(2) million, $5 million and $2 million, respectively, related to interest and penalties associated with uncertain tax positions.
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, 2024, 2023 and 2022:
202420232022
U.S. federal statutory rate21.0 %21.0 %21.0 %
Increase (decrease) resulting from:
Foreign rate differences(1.6)(1.0)(0.5)
Dividend repatriation cost0.6 0.7 0.6 
Global intangible low-taxed income1.7 2.0 1.0 
U.S. state taxes0.6 (0.1)0.1 
Foreign derived intangible income(0.7)(0.9)(0.8)
Foreign exchange1.7 (1.6)(1.7)
Non-deductible goodwill impairment— 1.3 — 
Unremitted earnings of Russian subsidiaries0.6 1.7 — 
Fair value adjustment of equity securities1.1 0.1 0.1 
Other(0.3)(0.8)(0.5)
Effective tax rate24.7 %22.4 %19.3 %

The 2024 effective tax rate increased 2.3 percentage points to 24.7%. The change in the effective tax rate for 2024, as compared to 2023, was unfavorably impacted by: (i) an increase in deferred tax liabilities related to the fair value adjustment of equity securities held by PMI; (ii) U.S. state taxes; and (iii) a deferred tax charge for unrealized foreign currency losses on intercompany loans related to the Swedish Match acquisition financing reflected in the consolidated statements of earnings, while the underlying pre-tax foreign currency movements fully offset in the consolidated statements of earnings and were reflected as currency translation adjustments in its consolidated statements of stockholders' (deficit) equity, partially offset by: (i) a lower deferred tax charge in 2024 related to the unremitted earnings of PMI's Russian subsidiaries as compared to the 2023 charge following the suspension of certain double tax treaties; (ii) the non-deductible Wellness and Healthcare goodwill impairment charge recorded in 2023; and (iii) a U.S. tax benefit for a worthless stock deduction under section 165(g) of the Internal Revenue Code related to PMI's investment in C.A. Tabacalera Nacional, a wholly owned foreign corporation incorporated in Venezuela. For further details on PMI's ceased operations in Venezuela and the impairment loss related to the sale of Vectura Group, see Note 20. Restructuring Activities and Note 3. Acquisitions and Divestitures, respectively.

The 2023 effective tax rate increased 3.1 percentage points to 22.4%. The change in the effective tax rate for 2023, as compared to 2022, was unfavorably impacted by: (i) an increase in deferred tax liabilities related to the unremitted earnings of PMI's Russian subsidiaries due to the unilateral suspension of certain Russian double tax treaties by the Russian authorities on August 8, 2023, with respect to certain payments including dividends; (ii) the non-deductible Wellness and Healthcare goodwill impairment charge and (iii) an increase in foreign tax credit limitation related to GILTI, partially offset by changes in earnings mix by taxing jurisdiction.
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)
20242023
Deferred income tax assets:
Accrued postretirement and postemployment benefits$208 $223 
Accrued pension costs384 450 
Inventory40 27 
Accrued liabilities213 191 
Net operating loss, tax credit, and other carryforwards 912 501 
Investments in equity interests507 80 
Foreign exchange— 149 
Other62 19 
Total deferred income tax assets2,326 1,640 
Less: valuation allowance(1,130)(369)
Deferred income tax assets, net of valuation allowance1,196 1,271 
Deferred income tax liabilities:
Intangible assets(1,862)(2,136)
Property, plant and equipment(152)(218)
Unremitted earnings(495)(438)
Foreign exchange(264)— 
Other— — 
Total deferred income tax liabilities
(2,773)(2,792)
Net deferred income tax assets (liabilities)$(1,577)$(1,521)

At December 31, 2024, PMI recorded deferred tax assets for net operating loss, tax credit, and other carryforwards of $912 million, with varying dates of expiration, primarily after 2029, including $381 million with an unlimited carryforward period. At December 31, 2024, PMI has recorded a valuation allowance of $1,130 million against deferred tax assets that do not meet the more-likely-than not recognition threshold.
At December 31, 2023, PMI recorded deferred tax assets for net operating loss, tax credit, and other carryforwards of $501 million, with varying dates of expiration, primarily after 2028, including $274 million with an unlimited carryforward period. At December 31, 2023, PMI has recorded a valuation allowance of $369 million against deferred tax assets that do not meet the more-likely-than-not recognition threshold.