Israeli taxman seeks $45 million from Coca Cola over royalties: report

FILE PHOTO: Coca-cola soda is shown on display during a preview of a new Walmart Super Center prior to its opening in Compton, California, U.S., January 10, 2017. REUTERS/Mike Blake/File Photo

JERUSALEM (Reuters) - Israel’s Tax Authority wants Coca-Cola to pay some 160 million shekels ($45 million) in taxes on royalties that the global beverage giant receives from its local franchise for use of the brand name in Israel, local newspapers reported.

Three leading Israeli newspapers said the tax bill is based on royalties of about 1 billion shekels transferred in recent years to Coca-Cola from Central Bottling Co, the Israel franchiser of Coca-Cola.

The Tax Authority declined to comment and officials at Coca-Cola were unreachable outside of business hours.

Under a tax treaty between the United States and Israel, the taxation rate for royalties for use of a trademark is 10 percent, but that rises to 15 percent for industrial royalties.

Haaretz newspaper said normally the tax would have been deducted at the source, but the tax authority could not do this because Coca-Cola does not have a local corporate presence.

The financial daily Calcalist said Coca-Cola retained Israeli law firm Goldfarb Seligman to handle the matter. Goldfarb Seligman declined to comment.

Central Bottling is one of Israel’s largest food and drinks maker, with annual sales of about 2 billion shekels.

Reporting by Steven Scheer, editing by Louise Heavens