A decade-long dispute between Coca-Cola and the US tax authorities has escalated to the point that the company could owe $16bn in back taxes, enough to wipe out a year and a half of profits, with the figure rising by more than $1bn a year.
“And why does their profitability dwarf that of the Coca-Cola Company, which owns the intangibles upon which the company’s profitability depends?” The tax treatment of its concentrate manufacturers has been a running sore between Coke and the IRS for decades. A similar dispute was settled in 1996 by reallocating some of the subsidiaries’ previous profits to the US parent company, based on a formula hashed out by negotiators.
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