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Taxes | 12 Months Ended
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Dec. 31, 2020
Income Taxes [Abstract] |
Taxes | Taxes (Loss) before taxes
($ millions) | 2020 |  | 2019 |  | 2018 |  |
Switzerland | (585) |  |  | (274) |  |  | (227) |  |  |
Foreign | (50) |  |  | (58) |  |  | (73) |  |  |
Total (loss) before taxes | (635) |  |  | (332) |  |  | (300) |  |  |
Current and deferred income tax (expense)/income
($ millions) | 2020 |  | 2019 |  | 2018 |  |
Switzerland | (14) |  |  | (34) |  |  | (77) |  |  |
Foreign | (105) |  |  | (168) |  |  | (157) |  |  |
Current income tax expense | (119) |  |  | (202) |  |  | (234) |  |  |
Switzerland | 96 |  |  | (246) |  |  | 78 |  |  |
Foreign | 127 |  |  | 124 |  |  | 229 |  |  |
Deferred tax income/(expense) | 223 |  |  | (122) |  |  | 307 |  |  |
Total income tax income/(expense) | 104 |  |  | (324) |  |  | 73 |  |  |
Analysis of tax rate Alcon's overall applicable tax rate can change each year since it is calculated as the weighted average tax rate based on pre-tax (loss)/income of each subsidiary. The main elements contributing to the difference between Alcon's overall applicable tax rate and the effective tax rate are summarized in the below table.
| 2020 |  | 2019 |  | 2018 |  |
($ millions unless indicated otherwise) |  |  | % |  |  |  | % |  |  |  | % |  |  |  |
Applicable tax rate | 98 |  |  | 15.4 | % |  | 39 |  |  | 11.7 | % |  | 82 |  |  | 27.3 | % |  |  |  |
Effect of disallowed expenditures | (20) |  |  | (3.1) | % |  | (23) |  |  | (6.9) | % |  | (26) |  |  | (8.7) | % |  |  |  |
Effect of equity-based compensation | (5) |  |  | (0.8) | % |  | (1) |  |  | (0.3) | % |  | (2) |  |  | (0.7) | % |  |  |  |
Effect of income taxed at reduced rates | 4 |  |  | 0.6 | % |  | 2 |  |  | 0.6 | % |  | 2 |  |  | 0.7 | % |  |  |  |
Effect of tax credits and allowances | 9 |  |  | 1.4 | % |  | 7 |  |  | 2.1 | % |  | 13 |  |  | 4.3 | % |  |  |  |
Effect of adjustments to contingent consideration and other liabilities | 17 |  |  | 2.7 | % |  | 11 |  |  | 3.3 | % |  | 11 |  |  | 3.7 | % |  |  |  |
Effect of option payments | (6) |  |  | (0.9) | % |  | (12) |  |  | (3.6) | % |  | (17) |  |  | (5.7) | % |  |  |  |
Effect of tax rate changes(1) | 10 |  |  | 1.6 | % |  | (342) |  |  | (103.0) | % |  | (14) |  |  | (4.7) | % |  |  |  |
Effect of changes in uncertain tax positions | (8) |  |  | (1.3) | % |  | 10 |  |  | 3.0 | % |  | (33) |  |  | (11.0) | % |  |  |  |
Effect of other items | (10) |  |  | (1.6) | % |  | (2) |  |  | (0.6) | % |  | (4) |  |  | (1.2) | % |  |  |  |
Effect of prior year items(2) | 15 |  |  | 2.4 | % |  | (13) |  |  | (3.9) | % |  | 61 |  |  | 20.3 | % |  |  |  |
Effective tax rate | 104 |  |  | 16.4 | % |  | (324) |  |  | (97.6) | % |  | 73 |  |  | 24.3 | % |  |  |  |
(1)Effect of tax rate changes in 2019 relates primarily to the adoption of the Swiss Tax Reform which resulted in a non-cash tax increase in tax expense of $304 million for the re-measurement of the Swiss deferred tax balances and a $31 million re-measurement of US deferred tax balances as a result of rate changes in the US following legal entity reorganizations executed related to the Spin-off. (2) In 2020 and 2019, the prior year items relate to changes in certain estimates which resulted in a $15 million tax benefit and $13 million tax expense, respectively. In 2018, the prior year items relate to an out of period income tax benefit of $61 million which Alcon concluded was not material to the current period or the prior periods to which they relate. Alcon has a substantial business presence in many countries and is therefore subject to different income and expense items that are non-taxable (permanent differences) or are taxed at different rates in those tax jurisdictions. This results in a difference between Alcon's applicable tax rate and effective tax rate as shown in the table above. The applicable tax rate in 2020, 2019 and 2018 was impacted by pre-tax losses in certain tax jurisdictions. The fluctuation in taxes and effective tax rates, excluding Swiss tax reform, is primarily due to the geographical pre-tax income and loss mix across certain tax jurisdictions relative to Alcon's consolidated (loss) before taxes, changes in uncertain tax positions and certain non-recurring items.

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