USA – The Coca-Cola Co. has announced its intention to appeal a U.S. Tax Court decision that supports a government bid to claim approximately $6 billion in taxes.
The soft drinks giant revealed that the U.S. Tax Court rendered this decision on August 2, 2024, in the ongoing case between Coca-Cola and the U.S. Internal Revenue Service (IRS).
According to the company’s statement, the court’s decision reflects a liability of approximately $2.7 billion, which is expected to rise to around $6 billion when accounting for interest.
“Coca-Cola strongly believes the IRS and the Tax Court misinterpreted and misapplied the applicable regulations involved in the case and will vigorously defend its position on appeal. The company has 90 days to file a notice of appeal to the U.S. Court of Appeals for the Eleventh Circuit.
The company looks forward to the opportunity to begin the appellate process and, as part of that process, will pay the agreed-upon liability and interest to the IRS,” the company stated.
The dispute dates back to September 2015, when Coca-Cola first received a notice from the IRS seeking around $3.3 billion in additional federal income tax for the years 2007 through 2009.
The IRS claimed its intent to reallocate over US$9 billion of income to the U.S. parent company from certain foreign affiliates retroactively, rejecting a previously agreed-upon methodology without prior notice to the company.
The case was subsequently pushed towards litigation, with the Tax Court issuing opinions in favor of the IRS in 2020 and again in 2023.
Coca-Cola maintains its confidence in prevailing on appeal regarding the issues raised in both the 2020 and 2023 Tax Court opinions.
Coca-Cola accused of fraudulent activities
Concurrently, Coca-Cola faces allegations of fraudulent product labeling in Nigeria. The Federal Competition and Consumer Protection Commission (FCCPC) of Nigeria has accused Coca-Cola Nigeria and the Nigerian Bottling Company (NBC), a member of the Coca-Cola Hellenic Bottling Company, of misleading trade descriptions, unfair marketing tactics, and failure to comply with regulatory requirements.
The FCCPC’s investigation, which began in June 2019, revealed that Coca-Cola had changed the formulation of its Coke brand from regular sugar to non-nutritive sweeteners without informing consumers.
The companies marketed the Coca-Cola ‘Original Taste, Less Sugar’ variant as being identical in formulation to its ‘Original Taste’ variant, which was found to be untrue.
The FCCPC statement alleged that similar practices had been followed with the Sprite and Fanta brands, violating FCCPA regulations on misleading trade descriptions and abuse of dominant market positions
The statement also noted, “The migration at the time, though not concluded, apparently followed previously concluded, but undisclosed and uncommunicated migrations with respect to their other brands, to wit: Fanta and Sprite (as the Investigation will later discover).”
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