INDEGA has an advertising participation agreement with a related company, Coca-Cola Servicios de Colombia S.A. (“CCS SA”). The parties jointly fund marketing and advertising expenses related to brand positioning in the Colombian market. INDEGA receives reimbursements from CCS SA for several advertising concepts, including purchasing refrigeration equipment and packaging, general marketing expenses, participation in sales discounts through promotional packages, and compensation for loss of marginal contribution due to price reductions.
In INDEGA’s financial statements, costs incurred for these items are recorded as expenses, and the reimbursements received are recorded as non-operating income. The expenses are therefore treated as pass-through items, intended to show no net effect on INDEGA’s profit and loss. Within INDEGA’s TP-model, INDEGA is the tested party for the TNMM with ROTC as the PLI.
The CTA questioned INDEGA’s TP-model, particularly using ROTC as the PLI. Instead, the CTA used ROCE at the PLI and viewed the reimbursements, treated by INDEGA as a pass-through element, as relevant to profitability measurement.
