Bottlers performed all finished product manufacturing. Their manufacturing activity consisted of procuring raw materials and using Coca-Cola’s guidelines and production technologies to mix and convert raw materials into concentrate. The supply points manufactured concentrate. The bottlers mixed the concentrate with purified water, carbon dioxide, sweetener, and/or flavorings injected the finished beverages into bottles and cans and delivered the beverages to retail establishments. The bottlers produced most of the beverages using concentrate manufactured by the supply points.
The vast bulk of Coca-Cola’s beverages were (and are) produced and distributed by independent Coca-Cola bottlers. Most of the ServCos, similar to the supply points, were owned by Export Corp. The ServCos were responsible for local advertising and in-country consumer marketing. owned the seven supply points involved here.Īs concentrate manufacturing became consolidated into fewer and fewer supply point affiliates, Coca-Cola’s other foreign activities were typically taken over by local services companies (ServCos). established affiliates to manufacture and supply concentrate to local bottlers. (Export Corp.), a wholly-owned domestic subsidiary of Coca-Cola. The court largely upheld the IRS’s adjustments ( The Coca-Cola Co. The gist of the IRS’s position was that the supply points paid insufficient compensation to Coca-Cola for the rights to use Coca-Cola’s intangible property. These affiliates are referred to as “supply points.”
COCA COLA TRANSFER PRICING CODE
The deficiencies result from “transfer pricing” adjustments under tax code Section 482 in which the IRS reallocated substantial amounts of income to Coca-Cola chiefly from its foreign manufacturing affiliates. These adjustments produced tax deficiencies totaling more than $3.3 billion. The Internal Revenue Service in connection with its examination of The Coca-Cola Co.’s tax returns for 2007-2009, made adjustments that increased Coca-Cola’s aggregate taxable income by more than $9 billion. Tax Court ruled in November that the royalties it charged to its affiliates were not commiserate with what it would have charged to unrelated parties. Coca-Cola owes more than $3.3 billion in taxes after the U.S.
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