(New York) American soda giant Coca-Cola has been ordered to pay some $2.7 billion in U.S. tax adjustments, or about $6 billion including interest, for incorrectly reporting its foreign sales between 2007 and 2009, it announced Friday.
“Coca-Cola strongly believes that the IRS and the Federal Internal Revenue Service have misinterpreted and misapplied the regulations in force […] and we will defend our position vigorously on appeal,” the Atlanta, Georgia-based group said in a statement.
The penalty covers the years 2007, 2008 and 2009. It represents a total of $2.72 billion over these three years, according to the decision handed down Wednesday by Judge Albert G. Lauder, consulted by AFP.
But including interest, the tax bill for the tax adjustment rises to about $6 billion by June 28, 2024, according to Coca-Cola’s statement and a stock exchange filing on July 29.
In this document, the group specified that it would still be necessary to add the interest accumulated between June 28 and the actual payment – on an undetermined date at this stage – but the company also indicated that it would be reimbursed if it obtained satisfaction on appeal.
The group also warned that if the US tax authorities decided to apply the same calculation methodology to financial years after 2009, it could face an additional adjustment of around $16 billion (including interest) as of December 31, 2023.
“We are optimistic that, between our ability to generate cash from our operating activities and our ability to borrow funds at reasonable interest rates, we will be able to manage the range of potential outcomes of this matter,” the group assured.
The case was launched in 2015 after an investigation by the US tax authorities.
They found that the giant had understated its taxable income in the United States – by $9 billion over the three years under review – by the way it calculated the amount paid by affiliates in Brazil, Chile, Costa Rica, Egypt, Ireland, Mexico and Swaziland.
These manufactured concentrated products (syrups, powder) in their factories, which were then used by hundreds of bottlers in Europe, Africa, Asia, Latin America and Australia to concoct drinks.
According to the tax authorities, they should have theoretically paid Coca-Cola much more for the right to use its secret formulas, name and other intellectual property.