USA – The Coca-Cola Company has announced plans to issue €1 billion (US$1.09 billion) in new debt, a move that will partially fund potential payments related to its ongoing tax litigation with the U.S. Internal Revenue Service (IRS).  

The company will issue two €500 million (US$546.1M) bonds, adding to its US$7 billion of new borrowing for the year. 

In a recent SEC filing, Coca-Cola stated that a portion of the raised funds would be allocated towards “making any potential payments in connection with our ongoing tax litigation with the United States Internal Revenue Service.”  

This litigation, which began in September 2015, involves a dispute over approximately US$2.7 billion in unpaid taxes, a figure projected to rise to around US$6 billion when including interest, according to the company. 

The Financial Times has reported that Coca-Cola might owe up to US$16 billion in back taxes.  

This potential liability stems from allegations that Coca-Cola concealed significant profits in low-tax jurisdictions such as Ireland and Brazil to evade U.S. tax obligations. 

The U.S. Tax Court had previously found that Coca-Cola had been hiding substantial earnings in these countries to avoid taxes. 

The €1 billion debt issuance, referred to as a “reverse Yankee” transaction, will see Coca-Cola raise funds in the Euro or Sterling bond markets, allowing the company to benefit from different central bank monetary policies.  

Chief Financial Officer John Murphy indicated that the funds could also include pre-funding for upcoming payments related to the IRS case. 

Coca-Cola is preparing to use the new debt to cover the initial US$6 billion for unpaid taxes and interest covering the years 2007 to 2009, following a recent decision by the U.S. Tax Court.  

This dispute began when the IRS sought an additional US$3.3 billion in federal income tax for those years. The IRS had challenged a previously agreed-upon methodology for income allocation, leading to litigation. 

Despite the ongoing tax issues, Coca-Cola reported a 3 percent increase in revenue for the second quarter of 2024, reaching US$12.4 billion.  

This growth was driven by a 9 percent increase in price/mix and a 6 percent rise in concentrate sales. 

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