
	Year Ended December 31,
(In millions)	2022		2021		2020
U.S. Federal:
Current	$	115.3	$	12.6	$	(6.4)
Deferred	263.7		(182.7)		(277.0)
	379.0		(170.1)		(283.4)
U.S. State:
Current	26.5		7.7		(0.1)
Deferred	20.3		(10.8)		7.7
	46.8		(3.1)		7.6
Non-U.S.:
Current	618.7		(91.3)		168.7
Deferred	(309.9)		869.2		55.8
	308.8		777.9		224.5
Income tax provision (benefit)	$	734.6	$	604.7	$	(51.3)
Earnings before income taxes:

United States	794.8		(1,982.5)		(945.5)
Foreign - Other	2,018.4		1,318.1		224.3
Total earnings (loss) before income taxes	$	2,813.2	$	(664.4)	$	(721.2)

For all periods presented, the allocation of earnings before income taxes between U.S. and non-U.S. operations includes intercompany interest allocations between certain domestic and foreign subsidiaries. These amounts are eliminated on a consolidated basis.


(In millions)	December 31, 2022		December 31, 2021
Deferred tax assets:
Employee benefits	$	129.6	$	271.3
Litigation reserves	20.5		94.4
Accounts receivable allowances	446.2		425.9
Inventory	159.3		187.8
Tax credit and loss carry-forwards	760.3		1,256.0
Operating lease assets	56.2		63.6
Interest expense	94.8		111.6
Intangible assets	149.3		151.1
Other	209.3		327.8
	2,025.5		2,889.5
Less: Valuation allowance	(387.0)		(780.4)
Total deferred tax assets	1,638.5		2,109.1
Deferred tax liabilities:
Plant and equipment	56.6		19.6
Operating lease liabilities	56.2		63.6
Intangible assets and goodwill	2,880.3		3,468.3
Other	151.5		39.9
Total deferred tax liabilities	3,144.6		3,591.4
Deferred tax liabilities, net	$	(1,506.1)	$	(1,482.3)

For those foreign subsidiaries whose investments are permanent in duration, income and foreign withholding taxes have not been provided on the unremitted earnings of those subsidiaries. This amount may become taxable upon a repatriation of assets from the subsidiary or a sale or liquidation of the subsidiary. The amount of such unremitted earnings is approximately $2.6 billion at December 31, 2022. Determination of the amount of any unrecognized deferred income tax liability on these unremitted earnings is not practicable as such determination involves material uncertainties about the potential extent and timing of any distributions, the availability and complexity of calculating foreign tax credits, and the potential indirect tax consequences of such distributions, including withholding taxes.


	Year Ended December 31,
	2022		2021		2020
Statutory tax rate	21.0	%	21.0	%	21.0	%


Clean energy and research credits	—	%	9.8	%	12.8	%
Foreign rate differential	(3.6)	%	31.4	%	8.6	%
Expiration of attributes	9.8	%	—	%	—	%
Goodwill impairment	6.5	%	—	%	—	%
State income taxes and credits	1.3	%	(0.6)	%	(1.6)	%
Tax settlements and resolution of certain tax positions	1.0	%	0.9	%	(3.8)	%

Impact of the Combination and divestitures	(6.7)	%	(109.7)	%	(35.5)	%
Incremental U.S. tax on foreign earnings	2.0	%	(36.9)	%	(3.6)	%
Valuation allowance	(13.6)	%	(8.4)	%	24.6	%
Deferred tax impact of tax law changes	5.4	%	7.0	%	—	%
Withholding taxes	1.5	%	(1.3)	%	(1.6)	%
Waived deductions under IRC § 59A	—	%	—	%	(3.3)	%
















Other items	1.5	%	(4.2)	%	(10.5)	%
Effective tax rate	26.1	%	(91.0)	%	7.1	%

In all years, our effective tax rate is impacted by the jurisdictional location of earnings and the corresponding tax rates in those jurisdictions. Subsequent to the Combination, the Company realizes benefits from lower tax rates in Singapore and Puerto Rico due to manufacturing and other incentives.

Prior to the Combination, Mylan was a U.K. tax resident, with its Corporate seat in the Netherlands. As of the date of the Combination, Viatris is domiciled in the U.S., and the applicable income tax rate to Viatris is the U.S. statutory federal income tax rate of 21.0%. The effective tax rate reconciliations of the years ended December 31, 2021 and December 31, 2020 have been recast to reflect this change.

During the year ended December 31, 2022, a Puerto Rico net operating loss, which was recorded in conjunction with the Combination, expired unutilized resulting in a $274.4 million write-off of deferred tax asset and corresponding valuation allowance. The expiration and valuation allowance impacts are reflected in the above table.

A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. At December 31, 2022, a valuation allowance has been applied to certain deferred tax assets in the amount of $387.0 million.

When assessing the realizability of deferred tax assets, management considers all available evidence, including historical information, long-term forecasts of future taxable income and possible tax planning strategies. Amounts recorded for valuation allowances can result from a complex series of estimates, assumptions and judgments about future events. Due to the inherent uncertainty involved in making these estimates, assumptions and judgments, actual results could differ materially. Any future increases to the Company’s valuation allowances could materially impact the Company’s consolidated financial condition and results of operations.

•Non-U.S. net operating loss carryforwards of approximately $1.01 billion, of which $810.8 million can be carried forward indefinitely, with the remaining $195.1 million expiring in years 2023 through 2042.

•Anticipatory foreign tax credits of $196.1 million which will generate from the reversal of future taxable income in certain non-U.S. jurisdictions which are taxed both in their local jurisdictions and in the U.S.

On November 16, 2020, the Company had a change in ownership pursuant to Section 382 of the Code. Under this provision of the Code, the utilization of any NOL or tax credit carryforwards incurred prior to the date of ownership change may be limited. Analyses of the limits for each ownership change indicates the annual limitation would not impair the Company's ability to utilize our U.S. federal credit carryovers. While state loss carryforwards may be limited by Section 382 of the Code, the carryforwards are largely offset by a valuation allowance.

On March 27, 2020, the CARES Act was enacted and signed into law. The CARES Act includes several provisions, including increasing the amount of deductible interest, allowing companies to carryback certain NOLs, and increasing the amount of NOLs that corporations can use to offset income. During the year ended December 31, 2020, the CARES Act reduced the Company’s 2020 income tax expense by $22.1 million resulting from additional deductible interest.

The Company is subject to income taxes and tax audits in many jurisdictions. A certain degree of estimation is thus required in recording the assets and liabilities related to income taxes. Tax audits and examinations can involve complex issues, interpretations, and judgments and the resolution of matters that may span multiple years, particularly if subject to litigation or negotiation.

Although the Company believes that adequate provisions have been made for these uncertain tax positions, the Company’s assessment of uncertain tax positions, including those arising from legal entity restructuring transactions in connection with the Combination, is based on estimates and assumptions that the Company believes are reasonable but the estimates for unrecognized tax benefits and potential tax benefits may not be representative of actual outcomes, and variations from such estimates could materially affect the Company’s financial condition, results of operations or cash flows in the period of resolution, settlement or when the statutes of limitations expire.

The Company is subject to ongoing IRS examinations. The years 2015 through 2019 are open years under examination. The years 2012, 2013 and 2014 have one matter open, and a Tax Court petition was filed regarding the matter and a trial was held in December 2018 and is discussed further below.

Several international audits are currently in progress. In some cases, the tax auditors have proposed adjustments or issued assessments to our tax positions, including with respect to intercompany transactions, and we are in ongoing discussions with some of the auditors regarding the validity of their positions.

In instances where assessments have been issued, we disagree with these assessments and believe they are without merit and incorrect as a matter of law. As a result, we anticipate that certain of these matters may become the subject of litigation before tax courts where we intend to vigorously defend our position.

In Australia, the tax authorities have issued notices of assessments to the Company for the years ended December 2009 to December 2020, subject to additional interest and penalties, concerning our tax position with respect to certain intercompany transactions. The tax authorities denied our objections to the assessments for the years ended December 2009 to December 2020 and we have commenced litigation in the Australian Federal Court challenging those decisions. The Company made a partial payment of $56.0 million in 2021 and $5.2 million in 2022 in order to stay potential interest and penalties resulting from this litigation.

In France, the tax authorities have issued notices of assessments to the Company for the years ended December 2013 to December 2015 concerning our tax position with respect to whether income earned by a Company entity not domiciled in France should be subject to French tax. We have commenced litigation before the French tax courts where the tax authorities will seek unpaid taxes, penalties, and interest.

In India, the tax authorities have issued notices of assessments to the Company seeking unpaid taxes and interest for the financial years covering 2013 to 2018 concerning our tax position with respect to certain corporate tax deductions and certain intercompany transactions. Some of these assessments remain in the audit phase where we are challenging them before the tax authorities while we are challenging some of the other assessments in the Indian tax courts.

The Company has recorded a net reserve for uncertain tax positions of $298.1 million and $315.6 million, including interest and penalties, in connection with its international audits at December 31, 2022 and 2021, respectively. In connection with our international tax audits, it is possible that we will incur material losses above the amounts reserved.

The Company’s major U.S. state taxing jurisdictions remain open from fiscal year 2013 through 2021, with several state audits currently in progress. The Company’s major international taxing jurisdictions remain open from 2012 through 2021.

The Company's U.S. federal income tax returns for 2012 through 2014 had been subject to proceedings in U.S. Tax Court involving a dispute with the IRS regarding whether certain costs related to ANDAs were eligible to be expensed and deducted immediately or required to be amortized over longer periods. A trial was held in U.S. Tax Court in December 2018 and on April 27, 2021, the Court affirmed Mylan’s position and held that patent litigation expenses related to ANDAs are immediately deductible. The IRS has appealed this decision.

The impact of an uncertain tax position that is more likely than not of being sustained upon audit by the relevant taxing authority must be recognized at the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position has less than a 50% likelihood of being sustained.

As of December 31, 2022 and 2021, the Company’s consolidated balance sheets reflect net liabilities for unrecognized tax benefits of $296.7 million and $322.9 million, respectively, of which $210.7 million as of December 31, 2022 would affect the Company’s effective tax rate if recognized, with the remainder being offset by potential correlative adjustments. Related accrued interest and penalties included in the consolidated balance sheets were $106.4 million and $96.8 million as of December 31, 2022 and 2021, respectively. For the years ended December 31, 2022, 2021 and 2020, the Company recognized $21.1 million of tax expense, $18.5 million of tax expense, and $6.0 million of tax benefits, respectively, related to interest and penalties on uncertain tax positions. Interest and penalties related to income taxes are included in the tax provision.


	Year Ended December 31,
(In millions)	2022		2021		2020
Unrecognized tax benefit — beginning of year	$	322.9	$	391.1	$	92.1
Additions for current year tax positions	8.2		—		13.4
Additions for prior year tax positions	1.0		—		35.7
Reductions for prior year tax positions	(5.8)		(9.1)		(5.2)
Settlements	(0.4)		(47.3)		(8.9)
Reductions due to expirations of statute of limitations	(1.9)		(7.0)		—
(Reduction) addition due to acquisition	(27.3)		(4.8)		264.0
Unrecognized tax benefit — end of year	$	296.7	$	322.9	$	391.1

The Company believes that it is reasonably possible that the amount of unrecognized tax benefits will decrease in the next twelve months by approximately $55.0 million, involving international and state audits and settlements and expiring statutes of limitations. The Company does not anticipate significant increases to the reserve within the next twelve months.