But according to Coca Cola leaving out the substantial sums related to licensing fees which were paid by foreign Coke producers and distributors was according to their accounting principles for transfer pricing. This way of having earnings accrued between different company branches was agreed back in 1996 with the IRS. To make things worse the US tax authority gave a very short notice warning of this claim and is even considering to bring Coke to court to get the resulting difference in taxes. There was no mention of any penalties though.
When reached for comment, a Coca Cola company representative first explained that “The company has continued to abide by its terms for all subsequent years”. Next the rep. explained what the company plans to do in this situation: “The company firmly believes that the assessments are without merit and plans to pursue all administrative and judicial remedies necessary to resolve this matter”