Amcor plcAMCR
Amcor plc Income Taxes Disclosure
Income Taxes
Amcor plc is a tax resident of the United Kingdom of Great Britain and Northern Ireland ("UK").
The components of income before income taxes and equity in income/(loss) of affiliated companies were as follows:
| Years ended June 30, | ||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Domestic (UK) | $ | (210) | $ | (108) | $ | 82 | ||||||||||||||
| Foreign | 860 | 1,015 | 1,169 | |||||||||||||||||
| Total income before income taxes and equity in income/(loss) of affiliated companies | $ | 650 | $ | 907 | $ | 1,251 | ||||||||||||||
Income tax expense consisted of the following:
| Years ended June 30, | ||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
Current tax: | ||||||||||||||||||||
| Domestic (UK) | $ | 1 | $ | 2 | $ | 3 | ||||||||||||||
| Foreign | 259 | 198 | 247 | |||||||||||||||||
| Total current tax | 260 | 200 | 250 | |||||||||||||||||
Deferred tax: | ||||||||||||||||||||
| Domestic (UK) | (17) | 18 | (6) | |||||||||||||||||
| Foreign | (108) | (55) | (51) | |||||||||||||||||
| Total deferred tax | (125) | (37) | (57) | |||||||||||||||||
| Income tax expense | $ | 135 | $ | 163 | $ | 193 | ||||||||||||||
The following is a reconciliation of income tax computed at the United Kingdom statutory tax rate of 25.0%, 25.0%, and 20.5% for fiscal years 2025, 2024, and 2023, respectively, to income tax expense.
| Years ended June 30, | ||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Income tax expense at statutory rate | $ | 163 | $ | 226 | $ | 256 | ||||||||||||||
| Foreign tax rate differential | (3) | (3) | 54 | |||||||||||||||||
| Capital gain on the sale of the Russian business | — | — | (63) | |||||||||||||||||
| Non-deductible expenses, non-taxable items, net | 33 | (6) | 16 | |||||||||||||||||
| Change in valuation allowance | (18) | 3 | (7) | |||||||||||||||||
| Uncertain tax positions, net | (18) | (51) | (39) | |||||||||||||||||
| Other (1) | (22) | (6) | (24) | |||||||||||||||||
| Income tax expense | $ | 135 | $ | 163 | $ | 193 | ||||||||||||||
(1)In fiscal year 2025, Other is comprised of adjustments to prior year which resulted in a $15 million benefit, movement in deferred tax positions with a $9 million benefit, effect of foreign currency exchange, changes in tax rates and other individually immaterial items. In fiscal year 2024, Other is comprised of adjustments to prior year provisions, movement in deferred tax positions, including a $15 million benefit from the Swiss Tax Reform, effects of foreign currency exchange rates, including a $14 million benefit from inflation adjustment in Argentina, partially offset by changes in tax rates, and other individually immaterial items. In fiscal year 2023, Other is comprised of effects of foreign currency exchange of $25 million, adjustments to prior year, movement in deferred tax positions, changes in tax rate, and other individually immaterial items.
Amcor operates in over forty different jurisdictions with a wide range of statutory tax rates. The tax expense from operating in non-UK jurisdictions in excess of the UK statutory tax rate is included in the line "Foreign tax rate differential" in the above tax rate reconciliation table. For fiscal year 2025, the Company's effective tax rate was 20.8% as compared to the effective tax rates of 18.0% and 15.4% for fiscal years 2024 and 2023, respectively. The higher effective tax rate for fiscal year 2025 versus fiscal year 2024 is largely attributable to non-deductible expenses related to the Merger in the current period. The higher effective tax rate for fiscal year 2024 versus fiscal year 2023 is largely attributable to the non-taxable gain on the disposal of the Russian business in the comparative period.
On July 4, 2025, the One Big Beautiful Bill Act (the "OBBBA") was signed into law. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. ASC 740 requires the effects of changes in tax rates and laws to be recognized in the periods in which the legislation is enacted. The Company does not expect that the OBBBA will have a material impact on its income tax expense, net tax assets or liabilities, or cash flows.
The first component of the 15% global minimum tax applied on a country-by-country basis (the "Pillar Two rule") is applicable to the Company from July 1, 2024. While the Company does not currently expect the Pillar Two rule to have a material impact on its effective tax rate, the analysis is ongoing as the Organization for Economic Cooperation and Development ("OECD") continues to release guidance and as countries begin implementing legislation. Future developments could change this assessment, and it is possible that the Pillar Two rule could adversely impact the Company's tax rate and subsequent tax expense.
Significant components of deferred tax assets and liabilities are as follows:
| June 30, | ||||||||||||||
| ($ in millions) | 2025 | 2024 | ||||||||||||
Deferred tax assets: | ||||||||||||||
| Inventories | $ | 17 | $ | 15 | ||||||||||
| Accrued employee benefits | 152 | 78 | ||||||||||||
| Derivatives and financial instruments | 20 | — | ||||||||||||
| Provisions | 32 | 9 | ||||||||||||
| Net operating loss carryforwards | 708 | 345 | ||||||||||||
| Tax credit carryforwards | 54 | 31 | ||||||||||||
| Accruals and other | 64 | 50 | ||||||||||||
| Total deferred tax assets | 1,047 | 528 | ||||||||||||
| Valuation allowance | (664) | (403) | ||||||||||||
| Net deferred tax assets | 383 | 125 | ||||||||||||
Deferred tax liabilities: | ||||||||||||||
| Property, plant, and equipment | (821) | (267) | ||||||||||||
| Other intangible assets | (1,655) | (245) | ||||||||||||
| Derivatives and other financial instruments | — | (26) | ||||||||||||
| Undistributed foreign earnings | (171) | (23) | ||||||||||||
| Total deferred tax liabilities | (2,647) | (561) | ||||||||||||
| Net deferred tax liability | (2,264) | (436) | ||||||||||||
| Balance sheet location: | ||||||||||||||
| Deferred tax assets | 218 | 148 | ||||||||||||
| Deferred tax liabilities | (2,482) | (584) | ||||||||||||
| Net deferred tax liability | $ | (2,264) | $ | (436) | ||||||||||
The Company maintains a valuation allowance on net operating losses and other deferred tax assets in jurisdictions for which it does not believe it is more likely than not to realize those deferred tax assets based upon all available positive and negative evidence, including historical operating performance, carry-back periods, reversal of taxable temporary differences, tax planning strategies, and earnings expectations. The Company's valuation allowance increased by $261 million, increased by $3 million, and decreased by $7 million for fiscal years 2025, 2024, and 2023, respectively.
As of June 30, 2025, and 2024, the Company had total net operating loss carry forwards, including capital losses, in the amount of $2.3 billion and $1.4 billion, respectively, and tax credits of $54 million and $31 million, respectively. The vast majority of the net operating loss carry forwards and tax credits do not expire.
The Company considers the following factors, among others, in evaluating its plans for indefinite reinvestment of its subsidiaries' earnings: (i) the forecasts, budgets, and financial requirements of the Company and its subsidiaries, both for the long-term and for the short-term; and (ii) the tax consequences of any decision to repatriate or reinvest earnings of any subsidiary. As of June 30, 2025, the Company has not provided deferred taxes on approximately $1.7 billion of earnings in
certain foreign subsidiaries because such earnings are indefinitely reinvested in its international operations related to the legacy Amcor business.
A precise assessment of the tax that would have been payable had the legacy Berry subsidiaries distributed their indefinitely reinvested earnings to the Company is not currently available because of the recent acquisition and the related multiple levels of corporate ownership and multiple tax jurisdictions involved in the hypothetical dividend distribution. The Company's preliminary estimate of indefinitely reinvested earnings related to the legacy Berry business is approximately $2.8 billion.
Upon distribution of such earnings in the form of dividends or otherwise, the Company may be subject to incremental foreign tax. It is not practicable to estimate the amount of foreign tax that might be payable. As of June 30, 2025, a cumulative deferred tax liability of $171 million has been recorded attributable to undistributed earnings that the Company has deemed are not indefinitely reinvested. The remaining undistributed earnings of the Company's subsidiaries are not deemed to be indefinitely reinvested and can be repatriated at no tax cost. Accordingly, there is no provision for income or withholding taxes on these earnings.
The Company accounts for its uncertain tax positions in accordance with ASC 740, "Income Taxes." At June 30, 2025, and 2024, unrecognized tax benefits totaled $224 million and $104 million, respectively, all of which would favorably impact the effective tax rate if recognized.
The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. As of June 30, 2025, 2024, and 2023, the Company's accrual for interest and penalties for these uncertain tax positions was $37 million, $17 million, and $13 million, respectively. The Company does not currently anticipate that the total amount of unrecognized tax benefits will result in material changes to its financial position within the next 12 months.
A reconciliation of the beginning and ending amount of unrecognized tax benefits for the fiscal years presented is as follows:
| June 30, | ||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Balance at the beginning of the year | $ | 104 | $ | 155 | $ | 195 | ||||||||||||||
| Additions related to acquisitions | 134 | — | — | |||||||||||||||||
| Additions based on tax positions related to the current year | 7 | 10 | 12 | |||||||||||||||||
| Additions for tax positions of prior years | 3 | 7 | 24 | |||||||||||||||||
| Reductions for tax positions from prior years | (21) | (39) | (69) | |||||||||||||||||
| Reductions for settlements | — | (2) | (5) | |||||||||||||||||
| Reductions due to lapse of statute of limitations | (3) | (27) | (2) | |||||||||||||||||
| Balance at the end of the year | $ | 224 | $ | 104 | $ | 155 | ||||||||||||||
The Company conducts business in a number of tax jurisdictions and, as such, is required to file income tax returns in multiple jurisdictions globally. The fiscal years 2020 through 2024 remain open for examination by the United States Internal Revenue Service ("IRS"), the fiscal year 2023 and 2024 remain open for examination by His Majesty’s Revenue & Customs ("HMRC"), and the fiscal years 2015 through 2024 are currently subject to audit or remain open for examination in various tax jurisdictions.
The Company believes that its income tax reserves are adequately maintained taking into consideration both the technical merits of its tax return positions and ongoing developments in its income tax audits. However, the final determination of the Company's tax return positions, if audited, is uncertain and therefore there is a possibility that final resolution of these matters could have a material impact on the Company's results of operations or cash flows.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 15, 2025 | Showing above |
| 2024 | Aug 16, 2024 | |
| 2023 | Aug 17, 2023 | |
| 2022 | Aug 18, 2022 | |
| 2021 | Aug 24, 2021 | |
| 2020 | Aug 27, 2020 | |
| 2019 | Sep 3, 2019 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.