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Coca-Cola owes $3.3bn extra taxes over foreign transfer licensing

Published 21 September 2015

The US-based beverage maker Coca-Cola has been issued a notice by Internal Revenue Service (IRS) of a potential $3.3bn liability of federal income-tax from 2007-2009 following a government audit.

The department has accused these firms of transferring income to countries that have lower tax rate.

Coca-Cola has many concentrate facilities across the globe and makes profit by selling the concentrate to local bottlers.

According to the firm, it secured 57% of its $46bn in revenue in 2014 from overseas markets and a higher percentage of its operating income is booked overseas. Therefore, in fiscal 2014, it reported only an effective tax rate of 23.6%, which is much below the statutory rate of 35%.

The company stated in its filing that its 1996 agreement with the IRS protects it from fines if it follows the methodology.

Image: Coca-Cola in tax troubles. Photo: courtesy of tiverylucky/FreeDigitalPhotos.net.