In 2020, a US Tax Court largely upheld the IRS’s transfer pricing adjustments against Coca-Cola. That left the company facing about $2.7 billion in additional taxes after the court found the company had under-reported income from transactions between its overseas affiliates. With interest, the total swelled to roughly $6 billion. Coke is appealing the decision.
Cross-border transfer pricing is how multinational companies price transactions between related entities. Governments use these rules to prevent improper profit shifting. This video explains how it works — and how it can trigger billion-dollar tax bills.
(Produced by Paul Detrick; Senior Producer: Andrew Satter; Executive Producer: Josh Block)
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