Coca-Cola’s dispute centers on licensing of properties to foreign-based businesses, which manufacture, distribute and sell products.
The IRS audit showed that the company should have reported higher income from 2007 to 2009.
Santander cut shares of Coca-Cola FEMSA, S.A.B.de C.V. (NYSE:KOF) from a buy rating to a hold rating in a research note issued to investors on Friday, ARN reports.
In the filing, Coca-Cola said it has followed the same process for determining its US taxable income for three decades.
“They hardly ever get to court, because neither party wants to experience the hazards of litigation”, Willens said.
CITY, MEXICO, September 17, 2015 (Marketwired via COMTEX) – Coca-Cola FEMSA, S.A.B.de C.V. (bmv:KOFL) KOF, -0.82% (“Coca-Cola FEMSA” or the “Company”), the largest public bottler of Coca-Cola products in the world, announced today that it has been selected for the third consecutive time as a member of the Dow Jones Sustainability Emerging Markets Index.
Transfer pricing has become an issue as governments reassess taxable incomes when companies transfer money between the entities they own. The other brands licensed to the Company by The Coca-Cola Company include Coca-Cola Light, Sprite and Fanta.
“The IRS now seeks to depart from this long-standing practice in order to increase substantially the amount of tax”, the company said in a statement. It continued on to say that the IRS had agreed to the methodology for tax returns from 1987 to 1995 and for five successive audits through 2006. “We are among hundreds of other companies now facing these types of adjustments involving payments”.
Coca-Cola has opposed the taxes and said that IRS assessment is without merit. “Furthermore, it would be inappropriate for the Internal Revenue Service to provide comment on any real examples, hypothetical examples or suppositions regarding a taxpayer or taxpayers”.
Coca-Cola has been adept at whittling its tax bill compared to many companies, an analysis a year ago by the Atlanta Journal-Constitution of its and other big Georgia companies’ tax disclosures showed.
The $3.3 billion also includes interest, Bloomberg added. This is determined by dividing its current price per share by its earnings per share. Last year, it reported an effective tax rate of 23.6%, below the USA statutory rate of 35%, due to a higher percentage of operating income coming overseas. The price was at $39.15, gaining 1.69% till the last intraday data.
Coca-Cola Enterprises, Inc. (NYSE:CCE) witnessed a decline in the market cap on Thursday as its shares dropped 0.83% or 0.41 points.