Corporate income tax and other taxes can generate necessary revenues and avoid passing the bill for funding today’s society to future generations. Taxes can also ensure that societal costs are reflected in a product’s price—for instance, in the case of fossil fuels and combustible tobacco products— thereby encouraging consumers and producers of these products to shift to less harmful options.
PMI is a good corporate citizen everywhere we operate. Paying taxes commensurate with our economic activities is not only our duty but the responsible thing to do and a key component of our social contract in every country in which we do business.
The table below provides an overview of the 2021 corporate income tax, excise taxes, VAT, and sales taxes reported by PMI and its affiliates in the countries where we operate. In addition to the taxes reported by PMI legal entities, our importers or distributors in many countries are responsible for paying import duties and excise taxes on our products. Though such payments may not appear in PMI’s financial statements, they represent a portion of the product taxes paid by our consumers worldwide and so are also included in the table below.
PMI has implemented governance arrangements that set out clear accountabilities for the management of tax compliance risks and tax planning. We maintain a comprehensive, effective, and practical risk management program with shared best practices, a structured and documented control framework, appropriate planning, and coordinated decision-making.
Our mandatory practices encompass:
- Roles and responsibilities: Clear definitions of roles and responsibilities are formalized in each PMI affiliate per PMI’s Tax Compliance Program.
- Escalation to and involvement of the PMI Tax department: In accordance with PMI’s policies, PMI affiliates consult with the PMI Tax department on all important transactions, whether recurring or new, as well as on business structures or operations with other PMI affiliates or unrelated parties, and together determine positions, exposures, or actions regarding material, non-routine tax, or customs matters. Where there is sufficient uncertainty over the tax treatment of a particular transaction or a potentially significant impact, PMI obtains external advice.
- Tax reporting and procedures: PMI’s Tax Standards and Guidelines are designed to ensure that effective and predictable tax compliance and control measures are in place. Under these policies, all tax filing obligations must be accurately completed on a timely basis and in accordance with applicable laws and regulations.
- Documentation and tax records: Under PMI’s policies, PMI affiliates are responsible for the appropriate creation and retention of all relevant local tax records.
PMI very much supports the work of the Organisation for Economic Co-operation and Development (OECD) and Group of Twenty (G20) to prevent tax base erosion and profit shifting. PMI’s policies and practices ensure that we pay taxes commensurate with our economic activities and substance in each country. We do not engage in aggressive tax planning, abuse tax havens, or have in place any contrived tax structures. We also do not operate “letter box” companies.
PMI conducts all intercompany transactions on an arm’s-length basis, in accordance with current OECD principles, and we support greater transparency between taxpayers and tax authorities. When it is relevant and feasible, we have upfront conversations with tax authorities in the countries where we operate. In certain instances, we obtain tax rulings to provide a higher level of certainty not just for PMI, but also for the tax authorities.
However, such rulings are not the only means of securing transparency and certainty. For example, in several countries, we have joined monitoring programs with tax authorities. These programs promote ongoing and transparent relations between taxpayers and tax authorities.
This online content about our Integrated Report should be read in conjunction with PMI’s 2021 Integrated Report. The information and data presented here cover the 2021 calendar year or reflect status at December 31, 2021, worldwide, unless otherwise indicated. Where not specified, data come from PMI estimates. Please also refer to 'This report at a glance' on page 5 of the 2021 Integrated Report for more information. Aspirational targets and goals do not constitute financial projections, and achievement of future results is subject to risks, uncertainties and inaccurate assumptions, as outlined in our forward-looking and cautionary statements on page 252. In the 2021 Integrated Report and in related communications, the terms “materiality,” “material,” and similar terms, when used in the context of economic, environmental, and social topics, are defined in the referenced sustainability standards and are not meant to correspond to the concept of materiality under the U.S. securities laws and/or disclosures required by the U.S. Securities and Exchange Commission.