Coca-Cola: transfer pricing

The US International Revenue Service (IRS) has finished the inspection of Coca-Cola. Five years worth of tax officers’ work was not in vain. The company has received claims for 3.3 billion dollars plus penalties.

The IRS thinks that the company has distorted the amounts of payments for various intangible assets which were being used by subsidiaries outside the US. That is why there was a shortfall in profits in the USA. The effective rate of income tax for 2014 amounted to 23.6% at the nominal rate of 35%.

Coca-Cola insists on the absence of violations, as well as on the fact that it was following the transfer pricing agreement with the IRS of 1996.

Let us remind you that the company’s issues with transfer pricing have been noticed in other countries as well.