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Tax Matters | 9 Months Ended
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Oct. 02, 2022
Income Tax Disclosure [Abstract] |
Tax Matters | Tax Matters A. Taxes on Income from Continuing Operations Our effective tax rate for continuing operations was 4.0% for the third quarter of 2022, compared to (4.2)% for the third quarter of 2021, and was 10.5% for the first nine months of 2022, compared to 7.8% for the first nine months of 2021. The higher effective tax rates for the third quarter and first nine months of 2022, compared to the third quarter and first nine months of 2021, were mainly due to the non-recurrence of certain initiatives executed in the third quarter of 2021 associated with our investment in the Consumer Healthcare JV with GSK, partially offset by tax benefits in the third quarter of 2022 related to global income tax resolutions in multiple tax jurisdictions spanning multiple tax years that included the closing of U.S. IRS audits covering five tax years. We elected, with the filing of our 2018 U.S. Federal Consolidated Income Tax Return, to pay our initial estimated $15 billion repatriation tax liability on accumulated post-1986 foreign earnings over eight years through 2026. The fourth annual installment of this liability was paid by its April 18, 2022 due date. The fifth annual installment is due April 18, 2023 and is reported in current Income taxes payable as of October 2, 2022. The remaining liability is reported in noncurrent Other taxes payable. Our obligations may vary as a result of changes in our uncertain tax positions and/or availability of attributes such as foreign tax and other credit carryforwards. B. Tax Contingencies We are subject to income tax in many jurisdictions, and a certain degree of estimation is required in recording the assets and liabilities related to income taxes. All of our tax positions are subject to audit by the local taxing authorities in each tax jurisdiction. These tax audits can involve complex issues, interpretations and judgments and the resolution of matters may span multiple years, particularly if subject to negotiation or litigation. The U.S. is one of our major tax jurisdictions, and we are regularly audited by the IRS. During the third quarter of 2022, Pfizer reached resolution of disputed issues at the IRS Independent Office of Appeals, thereby settling all issues related to U.S. tax returns of Pfizer for the years 2011-2015. With respect to Pfizer, tax years 2016-2018 are under audit. Tax years 2019-2022 are open but not under audit. All other tax years are closed. In addition to the open audit years in the U.S., we have open audit years in certain major international tax jurisdictions dating back to 2011. For additional information, see Note 5D in our 2021 Form 10-K. C. Tax Provision/(Benefit) on Other Comprehensive Income/(Loss)
Components of Tax provision/(benefit) on other comprehensive income/(loss) include:
|  | Three Months Ended |  | Nine Months Ended
(MILLIONS) |  | October 2, 2022 |  | October 3, 2021 |  | October 2, 2022 |  | October 3, 2021
Foreign currency translation adjustments, net(a) |  | $ | 20 |  |  | $ | (32) |  |  | $ | (165) |  |  | $ | (30) |
Unrealized holding gains/(losses) on derivative financial instruments, net |  | 47 |  |  | 21 |  |  | 177 |  |  | 28 |
Reclassification adjustments for (gains)/losses included in net income |  | (72) |  |  | 13 |  |  | (97) |  |  | 48 |
|  | (25) |  |  | 34 |  |  | 80 |  |  | 76 |
Unrealized holding gains/(losses) on available-for-sale securities, net |  | (97) |  |  | (33) |  |  | (175) |  |  | (16) |
Reclassification adjustments for (gains)/losses included in net income |  | 76 |  |  | 1 |  |  | 137 |  |  | (22) |
|  | (21) |  |  | (32) |  |  | (38) |  |  | (37) |
Reclassification adjustments related to amortization of prior service costs and other, net |  | (7) |  |  | (22) |  |  | (23) |  |  | (39) |
Reclassification adjustments related to curtailments of prior service costs and other, net |  | — |  |  | (14) |  |  | (3) |  |  | (15) |
|  | (8) |  |  | (36) |  |  | (26) |  |  | (54) |
Tax provision/(benefit) on other comprehensive income/(loss) |  | $ | (33) |  |  | $ | (65) |  |  | $ | (149) |  |  | $ | (44) |
(a)Taxes are not provided for foreign currency translation adjustments relating to investments in international subsidiaries that we intend to hold indefinitely.

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