Corporate income tax and other taxes can generate necessary revenues and avoid passing the bill for funding today’s society to future generations. Excise tax can also ensure that societal costs are reflected in a product’s price, 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.
In addition to the taxes reported by PMI legal entities, our importers and 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 included in the table below.
PMI has implemented governance arrangements that set clear accountabilities for the management of tax compliance risks and tax planning. We maintain a comprehensive, effective, and practical risk management program that incorporates best practices, a structured and documented control framework, appropriate planning, and coordinated decision-making.
Our mandatory practices encompass the following:
- Roles and responsibilities: PMI’s Tax Compliance Program clearly defines the roles and responsibilities of each PMI affiliate.
- Escalation to, and involvement of, the PMI Tax department: Per PMI’s policies, our affiliates consult with the PMI Tax department on all important transactions, whether recurring or new, as well as on business structures and operations involving other PMI affiliates or unrelated parties. Together, they determine positions, exposures, and actions regarding material, non-routine tax or customs matters. Where there is sufficient uncertainty over the appropriate tax treatment of a particular transaction or a potentially significant impact, PMI obtains external advice.
- Tax reporting and procedures: PMI has designed its Tax Standards and Guidelines to ensure effective and predictable tax compliance and control measures are in place. Under these policies, all tax-filing obligations must be accurately completed in a timely fashion and in accordance with applicable laws and regulations.
- Documentation and tax records: PMI affiliates are responsible for the appropriate creation and retention of all relevant local tax records.
PMI 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. Our policies and practices ensure that PMI pays 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 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.
Such rulings are not the only means of securing transparency and certainty, as we also have joined monitoring programs with tax authorities in several countries. These programs promote ongoing and transparent relations between taxpayers and tax authorities.
Our strategy highlights the importance of governance-related topics, which cannot be overstated. Our company’s policies, rules, and procedures define our ability to implement sound strategies that successfully address environmental and social issues.
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This online content about our Integrated Report should be read in conjunction with PMI’s Integrated Report 2022. Unless otherwise indicated, the data contained herein cover our operations worldwide for the full calendar year 2022 or reflect the status as of December 31, 2022. Where not specified, data comes from PMI financials, non-financials, or estimates. Unless explicitly stated, the data, information, and aspirations referenced do not incorporate PMI’s Vectura Fertin Pharma business (consolidating the 2021 acquisitions of wellness and healthcare companies Fertin Pharma A/S, Vectura Group plc., and OtiTopic, Inc.), nor the late 2022 acquisition of Swedish Match AB. Please also refer to 'This report at a glance' on page 2 of the Integrated Report 2022 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 214. In the Integrated Report 2022 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.