Coca-Cola’s $6 Billion Tax Fight: How Transfer Pricing Works

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. (Source: Bloomberg)