v3.20.4
Tax Matters - Tax Rate Reconciliation (Details)
 12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Income Tax Disclosure [Abstract]      
U.S. statutory income tax rate 21.00% 21.00% 21.00%
TCJA impact [1] 0 (0.028) (0.166)
Taxation of non-U.S. operations [2],[3] (9.60%) (4.50%) 1.20%
Tax settlements and resolution of certain tax positions [4] (2.50%) (13.80%) (19.30%)
Completion of Consumer Healthcare JV transaction [4] 0.00% 8.20% 0.00%
U.S. Healthcare Legislation [5] 0.10% 0.00% (1.10%)
U.S. R&D tax credit and manufacturing deduction (1.30%) (0.80%) (2.20%)
Interest [6] 1.10% 0.60% 5.70%
All other, net [7] (2.40%) (2.50%) 3.90%
Effective tax rate for income from continuing operations 6.40% 5.40% (7.40%)
[1] See Note 5A.
[2] For taxation of non-U.S. operations, this rate impact reflects the income tax rates and relative earnings in the locations where we do business outside the U.S., together with the U.S. tax cost on our international operations, changes in uncertain tax positions not included in the reconciling item called “Tax settlements and resolution of certain tax positions,” as well as changes in valuation allowances. Specifically: (i) the jurisdictional location of earnings is a significant component of our effective tax rate each year, and the rate impact of this component is influenced by the specific location of non-U.S. earnings and the level of such earnings as compared to our total earnings; (ii) the U.S. tax implications of our foreign operations is a significant component of our effective tax rate each year and generally offsets some of the reduction to our effective tax rate each year resulting from the jurisdictional location of earnings; (iii) the impact of certain tax initiatives; and (iv) the impact of changes in uncertain tax positions not included in the reconciling item called “Tax settlements and resolution of certain tax positions” is a component of our effective tax rate each year that can result in either an increase or decrease to our effective tax rate. The jurisdictional mix of earnings, which includes the impact of the location of earnings as well as the U.S. tax cost on our international operations, can vary as a result of operating fluctuations in the normal course of business and as a result of the extent and location of other income and expense items, such as restructuring charges, asset impairments and gains and losses on strategic business decisions. See also Note 5A for the components of pre-tax income and Provision/(benefit) for taxes on income, which is based on the location of the taxing authorities, and for information about settlements and other items impacting Provision/(benefit) for taxes on income.
[3] In all years, the impact on our effective tax rate is the result of the jurisdictional location of earnings. In 2020 and 2019, the reduction in our effective tax rate resulting from the jurisdictional location of earnings is largely due to lower tax rates in certain jurisdictions, as well as manufacturing and other incentives for our subsidiaries in Singapore and to a lesser extent in Puerto Rico. We benefit from Puerto Rican tax incentives pursuant to a grant that expires during 2029. Under such grant, we are partially exempt from income, property and municipal taxes. In Singapore, we benefit from incentive tax rates effective through 2045 on income from manufacturing and other operations.
[4] For a discussion about tax settlements and resolution of certain tax positions and the impact of the gain on the completion of the Consumer Healthcare JV transaction, see Note 5A.
[5] The favorable rate impact in 2018 is a result of the updated 2017 invoice received from the federal government, which reflected a lower expense than what was previously estimated for invoiced periods, as well as certain tax initiatives.
[6] Includes changes in interest related to our uncertain tax positions not included in the reconciling item called “Tax settlements and resolution of certain tax positions”.
[7] All other, net is primarily due to routine business operations.