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In this edition of our Australian International Tax Update, we summarise recent significant Australian tax developments, examine their practical impact, and outline actions that multinational groups, foreign investors, private equity funds and international advisers should consider.

PepsiCo embedded royalties, ATO Decision Impact Statement, embedded royalties Australia, royalty withholding tax, diverted profits tax, intellectual property payments, IP arrangements Australia, multinational tax Australia, ATO royalties guidance

On 9 August 2024, the ATO sought to appeal a decision exempting PepsiCo from RWHT, highlighting its focus on taxing embedded royalties, IP, and applying DPT.

STAI, a SingTel subsidiary, lost its court appeal, highlighting ATO’s focus on tax avoidance. STAI owes ATO $268m in tax and $125m in penalties due to debt deductions. The court found STAI paid excessive interest, benefiting SingTel.

PepsiCo appealed a court decision that found it owed the ATO AUD 3.6m in royalty withholding tax for FY 2018 and 2019.