Pfizer 2013 Annual Report Download - page 78

Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
2013 Financial Report 77
The following table provides the components of Provision for taxes on income based on the location of the taxing authorities:
Year Ended December 31,
(MILLIONS OF DOLLARS) 2013 2012 2011
United States
Current income taxes:
Federal $142 $(941)$ 1,162
State and local (106)(54)177
Deferred income taxes:
Federal 2,124 869 380
State and local (33)(339)(232)
Total U.S. tax provision/(benefit) 2,127 (465)1,487
International
Current income taxes 2,544 2,430 2,046
Deferred income taxes (365)256 88
Total international tax provision 2,179 2,686 2,134
Provision for taxes on income $4,306 $2,221 $3,621
In 2013, the Provision for taxes on income was impacted by the following:
• U.S. tax expense of approximately $2.3 billion as a result of providing U.S. deferred income taxes on certain funds earned outside the U.S.
that will not be indefinitely reinvested overseas, virtually all of which were earned in the current year (see Note 5C. Tax Matters: Deferred
Taxes);
• U.S. tax benefits of approximately $430 million, representing tax and interest, resulting from a multi-year settlement with the U.S. Internal
Revenue Service (IRS) with respect to audits of the Wyeth tax returns for the years 2006 through date of acquisition, and international tax
benefits of approximately $470 million, representing tax and interest, resulting from the resolution of certain tax positions pertaining to prior
years with various foreign tax authorities, and from the expiration of certain statutes of limitations;
• The unfavorable tax rate associated with the $1.3 billion of patent litigation settlement income;
• The non-deductibility of the $292 million of goodwill derecognized and the jurisdictional mix of the other intangible assets divested as part
of the transfer of certain product rights to our equity-method investment in China;
• The non-deductibility of the $223 million loss on an option to acquire the remaining interest in Teuto, a 40%-owned generics company in
Brazil, since we expect to retain the investment indefinitely, and the non-deductibility of a $32 million impairment charge related to our
equity-method investment in Teuto;
• The extension of the U.S. R&D tax credit (resulting in the full-year benefit of the 2012 and 2013 U.S. R&D tax credit being recorded in
2013); and
• The non-deductibility of a $280 million fee payable to the federal government as a result of the U.S. Healthcare Legislation.
In 2012, the Provision for taxes on income was impacted by the following:
• U.S. tax expense of approximately $2.2 billion as a result of providing U.S. deferred income taxes on certain current-year funds earned
outside the U.S. that will not be indefinitely reinvested overseas (see Note 5C. Tax Matters: Deferred Taxes);
• U.S. tax benefits of approximately $1.1 billion, representing tax and interest, resulting from a multi-year settlement with the IRS with
respect to audits of the Pfizer Inc. tax returns for the years 2006 through 2008, and international tax benefits of approximately $310 million,
representing tax and interest, resulting from the resolution of certain tax positions pertaining to prior years with various foreign tax
authorities, and from the expiration of certain statutes of limitations;
• The non-deductibility of a $336 million fee payable to the federal government as a result of the U.S. Healthcare Legislation;
• The non-deductibility of the $491 million legal charge associated with Rapamune litigation (see also Note 4. Other (Income)/Deductions––
Net); and
• The expiration of the U.S. R&D tax credit on December 31, 2011.
In 2011, the Provision for taxes on income was impacted by the following:
• U.S. tax expense of approximately $2.1 billion as a result of providing U.S. deferred income taxes on certain current-year funds earned
outside the U.S. that will not be indefinitely reinvested overseas (see Note 5C. Tax Matters: Deferred Taxes);
• International tax benefits of approximately $267 million, representing tax and interest, resulting from the resolution of certain prior-period
tax positions with various foreign tax authorities and from the expiration of certain statutes of limitations, and U.S. tax benefits of
approximately $80 million, representing tax and interest, resulting from the settlement of certain audits with the IRS; and
• The non-deductibility of a $248 million fee payable to the federal government as a result of the U.S. Healthcare Legislation.