Income Tax Accounting Policy
Pfizer Inc. accounts for income tax contingencies using a benefit recognition model. If Pfizer Inc. considers that a tax position is more likely than not to be sustained upon audit, based solely on the technical merits of the position, Pfizer Inc. recognizes the benefit. Pfizer Inc. measures the benefit by determining the amount that is greater than 50% likely of being realized upon settlement, presuming that the tax position is examined by the appropriate taxing authority that has full knowledge of all relevant information. Under the benefit recognition model, if Pfizer Inc.'s initial assessment fails to result in the recognition of a tax benefit, Pfizer Inc. regularly monitors position and subsequently recognizes the tax benefit:
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if there are changes in tax law, analogous case law or there is new information that sufficiently raise the likelihood of prevailing on the technical merits of the position to more likely than not;
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if the statute of limitations expires; or
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if there is a completion of an audit resulting in a favorable settlement of that tax year with the appropriate agency.
Pfizer Inc. regularly re-evaluates tax positions based on the results of audits of federal, state and foreign income tax filings, statute of limitations expirations, changes in tax law or receipt of new information that would either increase or decrease the technical merits of a position relative to the “more-likely-than-not” standard. Liabilities associated with uncertain tax positions are classified as current only when Pfizer Inc. expects to pay cash within the next 12 months. Interest and penalties, if any, are recorded in Provision for taxes on income and are classified on Pfizer Inc.'s consolidated balance sheet with the related tax liability.
Pfizer Inc. is subject to income tax in many jurisdictions and a certain degree of estimation is required in recording the assets and liabilities related to income taxes. All of Pfizer Inc.'s tax positions are subject to audit by the local taxing authorities in each tax jurisdiction. Tax audits can involve complex issues and the resolution of issues may span multiple years, particularly if subject to negotiation or litigation.
Source: Pfizer Inc., Annual Report
Income Tax Expense (Benefit)
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Pfizer Inc., income tax expense (benefit), continuing operations
Source: Based on data from Pfizer Inc. Annual Reports
| Item |
Description |
The company |
| Current income taxes |
The component of income tax expense for the period representing amounts of income taxes paid or payable (or refundable) for the period for all income tax obligations as determined by applying the provisions of relevant enacted tax laws to relevant amounts of taxable income (loss) from continuing operations. |
Pfizer Inc.'s current income taxes increased from 2008 to 2009 but then declined significantly from 2009 to 2010.
|
| Deferred income taxes |
The component of income tax expense for the period representing the net change in the entity's deferred tax assets and liabilities pertaining to continuing operations. |
Pfizer Inc.'s deferred income taxes declined from 2008 to 2009 but then increased from 2009 to 2010 exceeding 2008 level.
|
| Provision for taxes on income |
The sum of the current income tax expense (benefit) and the deferred income tax expense (benefit) pertaining to pretax income (loss) from continuing operations; income tax expense (benefit) may include interest and penalties on tax uncertainties based on the entity's accounting policy. |
Pfizer Inc.'s provision for taxes on income increased from 2008 to 2009 but then declined significantly from 2009 to 2010.
|
Effective Income Tax Rate (EITR)
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Pfizer Inc., effective income tax rate (EITR) reconciliation
Source: Based on data from Pfizer Inc. Annual Reports
| Item |
Description |
The company |
| Effective tax rate for income from continuing operations |
A ratio calculated by dividing the reported amount of income tax expense attributable to continuing operations for the period by GAAP-basis pretax income from continuing operations. |
Pfizer Inc.'s effective tax rate for income from continuing operations increased from 2008 to 2009 but then declined significantly from 2009 to 2010.
|
Deferred Tax Assets (Liabilities), Net
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Pfizer Inc., deferred tax assets (liabilities), net
Source: Based on data from Pfizer Inc. Annual Reports
| Item |
Description |
The company |
| Gross deferred tax assets |
The sum of the tax effects as of the balance sheet date of the amounts of all future tax deductions arising from temporary differences between tax basis and generally accepted accounting principles basis recognition of assets, liabilities, revenues and expenses, which can only be deducted for tax purposes when permitted under enacted tax laws (before the valuation allowance, if any, to reduce such sum amount to net realizable value). Includes any tax benefit realized in deferred tax assets for significant impacts of tax planning strategies. |
Pfizer Inc.'s gross deferred tax assets increased from 2008 to 2009 but then slightly declined from 2009 to 2010.
|
| Deferred tax assets |
The aggregate tax effects as of the balance sheet date of all future tax deductions arising from temporary differences between tax basis and generally accepted accounting principles basis recognition of assets, liabilities, revenues and expenses, which can only be deducted for tax purposes when permitted under enacted tax laws; net of deducting the allocated valuation allowance, if any, to reduce such amount to net realizable value. |
Pfizer Inc.'s deferred tax assets increased from 2008 to 2009 but then slightly declined from 2009 to 2010.
|
| Net deferred tax assets (liabilities) |
For entities that net deferred tax assets and tax liabilities, represents the unclassified net amount of deferred tax assets and liabilities as of the balance sheet date, which result from applying the applicable enacted tax rate to net temporary differences and carryforwards pertaining to assets or liabilities. A temporary difference is a difference between the tax basis of an asset or liability and its carrying amount in the financial statements prepared in accordance with generally accepted accounting principles that will reverse in ensuing periods. |
Pfizer Inc.'s net deferred tax assets (liabilities) declined from 2008 to 2009 and from 2009 to 2010.
|
