US: Coke owes it $3.3bn in back taxes

The US tax authority has told Coca-Cola that it owes $3.3 billion in taxes from 2007-2009, but the soft drink giant said Friday it was fighting the huge bill.

The Coca-Cola Company said in a securities filing that the Internal Revenue Service had sent it a notice saying it had under-reported income during the three-year period by leaving out substantial sums related to licensing fees paid by foreign Coke producers and distributors.

The IRS wants the US company to pay taxes on some of the money earned from offshore licensees.

But Coca-Cola said it had followed the accounting principles for transfer pricing -- how earnings are accrued between branches of a company -- established in an agreement with the IRS in 1996.

"The company has continued to abide by its terms for all subsequent years," it said.

It also said the IRS has given little warning of the claim before issuing it, and had already told Coca-Cola they are weighing going to court to collect the funds.

"The company firmly believes that the assessments are without merit and plans to pursue all administrative and judicial remedies necessary to resolve this matter," it said.

Coca-Cola noted though that the IRS has not claimed any penalties on the alleged amount to it.