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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Income Before Income Taxes

a. Income before income taxes:

		Year ended December 31,
		2018				2017				2016
		(U.S. $ in millions)
Parent Company and its Israeli subsidiaries		$	1,022			$	1,451			$	1,516
Non-Israeli subsidiaries			(3,618	)			(19,830	)			(692	)
		$	(2,596	)		$	(18,379	)		$	824

Schedule of the Provision for Income Taxes

b. Income taxes:

		Year ended December 31,
		2018				2017				2016
		(U.S. $ in millions)
In Israel		$	131			$	96			$	209
Outside Israel			(326	)			(2,029	)			312
		$	(195	)		$	(1,933	)		$	521
Current		$	700			$	373			$	481
Deferred			(895	)			(2,306	)			40
		$	(195	)		$	(1,933	)		$	521

Accumulated Other Comprehensive Income/(Loss) (Net of Tax)

		Year ended December 31,
		2018				2017				2016
		(U.S. $ in millions)
Income (loss) before income taxes		$	(2,596	)		$	(18,379	)		$	824
Statutory tax rate in Israel			23.0	%			24.0	%			25.0	%
Theoretical provision for income taxes		$	(597	)		$	(4,411	)		$	206
Increase (decrease) in effective tax rate due to:
The Parent Company and its Israeli subsidiaries—
Mainly tax benefits arising from reduced tax rates under benefit programs			(134	)			(253	)			(212	)
Non-Israeli subsidiaries, including impairments (*)			381				3,817				546
U.S. Tax Cuts and Jobs Act effect			97				(1,061	)			—
Increase (decrease) in other uncertain tax positions—net			58				(25	)			(19	)
Effective consolidated income taxes		$	(195	)		$	(1,933	)		$	521

* Income before income taxes includes goodwill impairment in non-Israeli subsidiaries that did not have a corresponding tax effect.

Schedule of Deferred Income Taxes

c. Deferred income taxes:

		December 31,
		2018				2017
		(U.S. $ in millions)
Long-term deferred tax assets (liabilities)—net:
Inventory related		$	113			$	40
Sales reserves and allowances			199				201
Provision for legal settlements			42				171
Intangible assets (*)			(2,282	)			(3,132	)
Carryforward losses and deductions and credits (**)			1,340				1,485
Property, plant and equipment			(167	)			(231	)
Deferred interest (***)			391				—
Provisions for employee related obligations			102				142
Other			123				125
			(139	)			(1,199	)
Valuation allowance—in respect of carryforward losses and deductions that may not be utilized (**)			(1,633	)			(1,504	)
		$	(1,772	)		$	(2,703	)

* The decrease in deferred tax liability is mainly due to impairment and amortization.

** The amounts are shown after reduction for unrecognized tax benefits of $35 million and $26 million as of December 31, 2018 and 2017, respectively.

This amount represents the tax effect of gross carryforward losses and deductions with the following expirations: 2019-2021—$206 million; 2022-2028—$448 million; 2029 and thereafter—$280 million. The remaining balance—$441 million—can be utilized with no expiration date.

*** The increase in deferred tax asset is mainly due to the interest expense limitation following the enactment of the Tax Cuts and Jobs Act.

Schedule of Deferred Tax Assets and Liabilities By Report Caption

The deferred income taxes are reflected in the balance sheets among:

		December 31,
		2018				2017
		(U.S. $ in millions)
Long-term assets—deferred income taxes			368				574
Long-term liabilities—deferred income taxes			(2,140	)			(3,277	)
		$	(1,772	)		$	(2,703	)

Schedule of Unrecognized Tax Benefits

The following table summarizes the activity of Teva’s gross unrecognized tax benefits:

		Year ended December 31,
		2018				2017				2016
		(U.S. $ in millions)
Balance at the beginning of the year		$	1,034			$	734			$	648
Increase related to prior year tax positions, net			76				56				23
Increase related to current year tax positions			11				26				71
Decrease related to settlements with tax authorities and lapse of applicable statutes of limitations			(49	)			(56	)			(103	)
Liabilities assumed in acquisitions			—				273				101
Other			—				1				(6	)
Balance at the end of the year		$	1,072			$	1,034			$	734

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