‘Coca-Cola owes $3.3 billion in unpaid taxes’

Washington, Sep 20:

The US Internal Revenue Service, or IRS, has demanded that the American multi-national Coca-Cola Co. pay $3.3 billion in unpaid taxes for the years between 2007-2009 together with the corresponding interest, the soft-drink maker announced.

The company based in Atlanta, Georgia, said in a statement on Saturday that it considers the IRS appraisal “without merit, and plans to pursue all administrative and judicial remedies necessary to resolve the matter”.

The IRS demands this payment from the manufacturer of soft drinks and other food products as the result of an audit carried out in fiscal years 2007, 2008 and 2009 that found that less income was declared in those years than the company actually earned, for which it demands payment of taxes on the undeclared revenues, but without applying any additional sanctions.

The discrepancies between the IRS and Coca-Cola is between the amount of revenue the company declared as taxable income in the US, and what the Internal Revenue Service says it should have declared, specifically claiming that the company under-reported the licensing fees it charged its affiliates in other countries to sell its products.

“The company has followed the same transfer pricing methodology for these licenses since the methodology was agreed with the IRS in a 1996 closing agreement that applied back to 1987,” Coca-Cola said in the statement.

Coca-Cola is not alone in these difficulties, since several giant US companies, like Amazon and Microsoft, have had ongoing disputes with the IRS in recent years over revenues coming from overseas markets. (IANS)