PM · 10-Q · 2026Q3 · Full report

Income Tax Rate Changes

Philip Morris International Inc. · 2026-10-23 · Importance 34 · Surprise 14 · In source text

PMI’s effective tax rate for the nine months ended September 30, 2026, increased 1.7 percentage points to 20.9%, and the company estimated a 2026 full-year rate of about 21.5%, excluding discrete tax events. The higher nine-month rate contributed to the 6.9% decrease in net earnings attributable to PMI, partly offset by higher operating income and lower net interest expense. For the third quarter, the effective tax rate increased 2.8 percentage points to 21.5%. Discrete tax benefits primarily drove a $0.03 increase in nine-month diluted EPS from the change in tax rate, while the third-quarter rate change reduced diluted EPS by $0.08, primarily due to benefits related to an interest expense election.

Key facts

• Philip Morris International Inc.'s effective tax rate for the nine months ended September 30, 2026 increased 1.7 percentage points to 20.9%; it estimates a 2026 effective tax rate of around 21.5%, excluding discrete tax events. source
• In May 2026, Philip Morris International Inc. recorded a favorable $18 million after-tax sales-tax settlement adjustment, increasing diluted EPS by $0.01, after court approval of an Egypt settlement covering 2016. source
• As of July 1, 2026, PMI stopped treating its Egyptian subsidiaries' operations as highly inflationary and stopped using the U.S. dollar as their functional currency; the change had no material impact on consolidated financial statements. source
• Many countries have enacted or taken actions to align with the OECD global minimum tax framework, Pillar Two, effective for taxable years beginning after December 31, 2023. source
• As of September 30, 2026, PMI applied highly inflationary accounting to subsidiaries in Argentina, Turkey and Lebanon because each economy's three-year cumulative inflation rate met or exceeded 100%. source
• For the nine months ended September 30, 2026 and 2025, exchange gains or losses from remeasurement adjustments related to highly inflationary accounting were not material. source

Impact estimates