The Coca-Cola case constitutes another landmark case in the transfer pricing field that applies subliminally the notions of accurate delineation, commercial rationality and value creation embedded in the 2017 OECD TPG. Even though the U.S. Tax Court did not refer expressly to these notions, it put forward its reasoning on an evidence-based analysis of what happened (accurate delineation), why it happened (commercial rationality) and where it is appropriate to conclude where compensable value was created to align with where profits should be allocated. The trilogy of these notions (accurate delineation, commercial rationality and value creation) has gained great momentum since the launch of the BEPS project as if it were something new. Case law not only from the U.S. but also from other jurisdictions, e.g., Canada and Australia, shows that profit allocation in the transfer pricing context has always been a matter of evidence-based analysis based on what, why and where an income generating activity really happened. In fact, such an analysis is the only point of reference for these loose terms that have no legal significance in themselves apart from splitting profits based on economic facts which is considered to be genuine if the arrangements by which profits are generated are accurately delineated and commercially rational, and, therefore, value is created. Mirna Screpante explores how profits associated with supposed marketing intangibles are so readily allocated to the supply point foreign affiliates in the Coca-Cola organisation simply by entering into contracts when, actually, marketing activities were essentially performed by service affiliates.
