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Taxes on Income (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Reconciliation Between Effective Tax Rate and U.S. Statutory Rate

A reconciliation between the effective tax rate for income from continuing operations and the U.S. statutory rate is as follows:

			2021												2020												2019
			Amount						Tax Rate						Amount						Tax Rate						Amount						Tax Rate
U.S. statutory rate applied to income from continuing operations before taxes			$	2,915					21.0		%				$	1,231					21.0		%				$	1,506					21.0		%
Differential arising from:
Foreign earnings			(1,446)						(10.4)						(965)						(16.5)						(461)						(6.4)
GILTI and the foreign-derived intangible income deduction			(75)						(0.5)						349						6.0						323						4.5
Tax settlements			(275)						(2.0)						(13)						(0.2)						(139)						(1.9)
R&D tax credit			(81)						(0.6)						(108)						(1.8)						(116)						(1.6)
Acquisition of VelosBio			(9)						(0.1)						559						9.5						—						—
Acquisition of Pandion			356						2.6						—						—						—						—
Valuation allowances			102						0.7						37						0.6						115						1.6
Restructuring			61						0.4						105						1.8						39						0.5
Acquisition-related costs, including amortization			8						0.1						38						0.6						70						1.0
State taxes			2						—						57						1.0						(12)						(0.2)
Acquisition of OncoImmune			—						—						97						1.7						—						—
Acquisition of Peloton			—						—						—						—						209						2.9
Tax Cuts and Jobs Act of 2017			—						—						—						—						117						1.6
Other			(37)						(0.2)						(47)						(0.8)						(86)						(1.2)
			$	1,521					11.0		%				$	1,340					22.9		%				$	1,565					21.8		%

Income Before Taxes

Income from continuing operations before taxes consisted of:

Years Ended December 31			2021						2020						2019
Domestic			$	1,854					$	(3,814)					$	(66)
Foreign			12,025						9,677						7,237
			$	13,879					$	5,863					$	7,171

Taxes on Income

Taxes on income from continuing operations consisted of:

Years Ended December 31			2021						2020						2019
Current provision
Federal			$	74					$	893					$	642
Foreign			1,273						969						1,523
State			(13)						44						(40)
			1,334						1,906						2,125
Deferred provision
Federal			240						(605)						(328)
Foreign			(77)						64						(228)
State			24						(25)						(4)
			187						(566)						(560)
			$	1,521					$	1,340					$	1,565

Deferred Income Taxes

Deferred income taxes at December 31 consisted of:

			2021												2020
			Assets						Liabilities						Assets						Liabilities
Product intangibles and licenses			$	—					$	2,933					$	109					$	1,250
Inventory related			119						370						43						315
Accelerated depreciation			—						589						—						587
Equity investments			—						335						—						175
Pensions and other postretirement benefits			487						338						826						248
Compensation related			301						—						235						—
Unrecognized tax benefits			75						—						117						—
Net operating losses and other tax credit carryforwards			867						—						764						—
Other			434						180						743						81
Subtotal			2,283						4,745						2,837						2,656
Valuation allowance			(287)												(404)
Total deferred taxes			$	1,996					$	4,745					$	2,433					$	2,656
Net deferred income taxes									$	2,749											$	223
Recognized as:
Other Assets			$	692											$	782
Deferred Income Taxes									$	3,441											$	1,005

Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

			2021						2020						2019
Balance January 1			$	1,537					$	1,225					$	1,893
Additions related to current year positions			306						298						199
Additions related to prior year positions			63						110						46
Reductions for tax positions of prior years (1)			(230)						(4)						(454)
Settlements (1)			(46)						(70)						(356)
Lapse of statute of limitations (2)			(58)						(22)						(103)
Spin-off of Organon			(43)						—						—
Balance December 31			$	1,529					$	1,537					$	1,225

(1)    Amounts in 2021 and 2019 reflect settlements with the IRS discussed below.

(2) Amount in 2019 includes $78 million related to the divestiture of Merck’s Consumer Care business in 2014.

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure of income before income tax between domestic and foreign jurisdictions.

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Tabular disclosure of the change in unrecognized tax benefits.

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