AbbVie 2013 Annual Report Download - page 96
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Note 12 Income Taxes
Earnings Before Income Taxes
years ended December 31 (in millions) 2013 2012 2011
Domestic $ (581) $ 625 $ 626
Foreign 5,913 5,100 3,042
Total earnings before income taxes $5,332 $5,725 $3,668
Income Taxes
years ended December 31 (in millions) 2013 2012 2011
Current
Domestic $ 226 $ 94 $ 177
Foreign 354 252 390
Total current taxes $ 580 $346 $ 567
Deferred
Domestic $ 678 $ 89 $(198)
Foreign (54) 15 (134)
Total deferred taxes 624 104 (332)
Total income taxes $1,204 $450 $ 235
Effective Tax Rate Reconciliation
years ended December 31 (in millions) 2013 2012 2011
Statutory tax rate 35.0% 35.0% 35.0%
Effect of foreign operations (11.5) (23.5) (25.4)
Resolution of uncertain tax positions — (3.4) (11.2)
Non-deductible litigation loss — 0.6 12.9
Puerto Rico excise tax credit (1.9) (1.2) (3.2)
State taxes, net of federal benefit 0.4 0.1 0.3
All other, net 0.6 0.3 (2.0)
Effective tax rate 22.6% 7.9% 6.4%
The benefit from foreign operations reflected the impact of lower income tax rates in locations outside
the United States, tax exemptions and incentives in Puerto Rico and other foreign tax jurisdictions,
together with the cost of repatriation decisions. As further discussed in the ‘‘Deferred Tax Assets and
Liabilities’’ section following, income tax expense in 2013 included income tax expense relating to 2013
earnings outside the United States that are not deemed indefinitely reinvested. Income taxes in 2012
and 2011 included the recognition of tax benefits totaling approximately $195 million and $410 million,
respectively, as a result of favorable resolutions of various tax positions pertaining to prior years.
Income taxes in 2011 also reflected the non-deductibility of a litigation reserve.
Puerto Rico enacted legislation that assesses an excise tax beginning in 2011 on certain products
manufactured in Puerto Rico. The tax is levied on gross inventory purchases from entities in Puerto
Rico and is included in cost of products sold in the consolidated statements of earnings. The majority
of the tax is creditable for U.S. income tax purposes.
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