Apply fair fiscal practices

28 Mar 2024
To achieve the common goal of a safe, functional and prosperous society, governments worldwide must have the financial resources to fund public goods, services, and infrastructure.
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Corporate income tax and other taxes can generate necessary revenues and prevent 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, third-party 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. 

2023 taxes

2023 taxes
Total (USD billion)
Corporate income tax 2.3
Total excise taxes on PMI products 73.9
- Excise taxes on PMI products reported by PMI affiliates 49.4
- Excise taxes reported by our importers and distributors 24.5
VAT and sales tax 9.3

Our tax strategy 

Legal obligations and societal expectations require that our transactions are based on sound tax strategies and that we act in good faith in all interactions with tax authorities and other stakeholders. In this regard, PMI has developed the PMI Global Tax Documents, including all global and affiliate tax policies, standards, and guidelines. 

PMI’s tax strategy is to maintain a comprehensive, effective, and practical risk management program, shared best practices, a structured and documented control framework, proper planning, and coordinated decision-making. These measures ensure that tax positions taken are appropriate and tax compliance and reporting mechanisms are robust. 

Moreover, PMI considers it important to have in place tax principles and practices that allow us to pay our taxes in a sustainable manner by balancing the interests of our various stakeholders, including our consumers, our investors, and the countries where we do business. 

PMI’s consolidated reporting of income taxes follows U.S. Generally Accepted Accounting Principles (GAAP) and Securities and Exchange Commission (SEC) rules and regulations. 


PMI’s tax strategy and its implementation are the responsibility of the PMI Tax Department, a centralized, fit-for-purpose global organization led by Vice President Tax who reports to PMI’s Chief Financial Officer. PMI Global Tax Documents are standardized and applied consistently. 

Principles of tax governance 


PMI has implemented governance arrangements that set clear accountabilities for the management of tax compliance and tax planning.

The PMI Global Tax Documents are designed to ensure clarity regarding:

  • Roles and responsibilities: PMI Global Tax Documents clearly define roles and responsibilities with respect to tax matters. 
  • Involvement of the PMI Tax Department: PMI colleagues 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. The PMI Tax Department determines 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 Global Tax Documents to have effective and predictable tax compliance and control measures in place. All tax filing obligations (internal and external) must be accurately completed on a timely basis in accordance with applicable laws and regulations. In particular, the PMI Tax Compliance Program establishes an overarching framework for the management of global tax compliance and risk across the company. This program includes guidance on defining roles and responsibilities, personnel training and development, involvement of tax advisers, master data management, contract management, interacting with tax authorities, and preparing for audits. It also provides guidelines for specific tax areas, including indirect taxes and customs topics, corporate income tax, withholding taxes, and transfer pricing. 
  • Documentation and tax records: The PMI Tax Department is part of the team responsible for the appropriate creation, retention, and/or oversight of all relevant local tax records in each affiliate. 
  • Support and review of business activities: The PMI Tax Department reviews business structures and transactions to identify potential tax risks. For new business activities, the PMI Tax Department is involved in every step of the process, from the setup of business models and agreements to discussions with tax authorities.

Business and economic substance

As of December 31, 2023, PMI products are sold in more than 175 markets worldwide. The company has over 160 affiliates that operate in more than 90 countries and 50 manufacturing facilities. Our business structures have commercial substance and purpose. 

PMI supports the work of the Organization 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 in which we operate. 

PMI complies with local country transfer pricing legislation and the OECD’s transfer pricing guidelines, including the Base Erosion and Profit Shifting (BEPS) project, which entails the preparation of a Country-by-Country Report (CbCR). This report includes quantitative and qualitative data and contributes to a better understanding of our economic and tax responsibilities in each country where we operate. 

We do not engage in aggressive tax planning, abuse tax havens, or have in place any contrived tax structures. We also do not operate “letterbox” companies. 

Tax risk management strategy

PMI conducts all intercompany transactions on an arm’s-length basis in accordance with current OECD principles. 

In line with the recommended best practices issued by the OECD within BEPS, PMI seeks to increase its tax certainty by entering into Advance Pricing Agreements (APAs). An APA is an agreement entered into between a taxpayer and the tax authorities of one (unilateral APA) or more (bilateral or multilateral APA) jurisdictions. It confirms the selection and application of the transfer pricing method used to set up the prices in intercompany transactions. 

PMI currently has a portfolio of at least 20 active APAs, both unilateral and bilateral. These APAs are a key part of our strategy to obtain tax certainty. 

Apart from APAs, PMI uses other mechanisms to manage its tax positions. 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 for both PMI and 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, with the aim of establishing PMI as a low-risk taxpayer in the relevant jurisdiction. These programs promote ongoing and transparent relations between taxpayers and tax authorities. 

Where available, PMI adheres to and promotes participation in cooperative compliance programs in countries in which PMI operates. For example, PMI participates in the “Adempimento Collaborativo” program in Italy and the "Program Wspoldzialania" in Poland. Such programs establish a relationship of trust between the tax authorities and taxpayer and increase certainty on relevant tax issues. 

Relationships with tax authorities

As is the case with other multinational companies, PMI’s tax returns are regularly audited by tax authorities. PMI responds to tax audit requests in a timely manner while ensuring full transparency regarding our business operations. Our working relationships with governments and fiscal authorities are conducted in a professional and collaborative manner. 
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This online content about our Integrated Report should be read in conjunction with PMI’s Integrated Report 2023. This report includes metrics that are subject to measurement uncertainties due to inherent limitations in the nature and methods for data collection and measurement. The precision of different collection and measurement techniques may also vary. This report includes data or information obtained from external sources or third parties. Unless otherwise indicated, the data contained herein cover our operations worldwide for the full calendar year 2023 or reflect the status as of December 31, 2023. Where not specified, data comes from PMI financials, nonfinancials, or estimates. Unless explicitly stated, the data, information, and aspirations referenced in online content do not incorporate PMI’s wellness and healthcare business, Vectura Fertin Pharma. Regarding the Swedish Match acquisition, completed late 2022, unless otherwise indicated, online content does not include information pertaining to their sustainability performance. Please also refer to "This report at a glance" on page 2 of PMI's Integrated Report 2023 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 PMI's Integrated Report 2023 and in related communications, the terms “materiality,” “material,” and similar terms 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. 

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