TEHRAN, April 02 -Coca-Cola Co (KO.N) thought it had a deal with the U.S. Internal Revenue Service on how much the company charged foreign affiliates for the rights to make and sell Coke products abroad.
TEHRAN, Young Journalists Club (YJC)-Coca-Cola Co (KO.N) thought it had a deal with the U.S. Internal Revenue Service on how much the company charged foreign affiliates for the rights to make and sell Coke products abroad.
Then in September 2015 a letter from the IRS arrived at Coca-Cola’s Atlanta headquarters with a bill for back taxes whose amount, $3.3 billion, stunned the world’s No. 1 soft drinks maker.
Coca-Cola sued the IRS, disputing the bill. The case is being tried now in U.S. Tax Court in Washington. A verdict is not expected for some time after the trial ends, expected in mid-April.
The case is being watched closely by tax experts as a sign of rising tension between tax authorities and multinational corporations over transfer pricing, that is, the way companies value the goods, services, trademark and patent rights that they constantly move among foreign units across national boundaries.
An important management discipline inside multinationals, transfer pricing is under more scrutiny than ever before from tax agencies worldwide because of strict new global standards, raising legal risks for companies and their investors.
The Coca-Cola case goes to trial as interest among corporations in seeking multi-year deals with the IRS covering transfer pricing arrangements has fallen in the past two years.
Source:Reuters
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