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An overview by Corrs Chambers Westgarth, Taxand Australia
The Australian High Court ruled in 2025 that PepsiCo and its US subsidiaries were not liable for royalty withholding tax or diverted profits tax (DPT) on payments from their Australian bottler, as the payments were not for intellectual property use.
The Australian Taxation Office (ATO) has now published its 2026 Decision Impact Statement, which largely confines the ruling to its facts but reiterates the relevance of embedded royalties, contract characterisation, and related-party scrutiny, signalling that the case’s principles on objective construction, consideration, and anti-avoidance onus will guide future tax assessments.
Angelina Lagana, Cameron Blackwood, Craig Boyle, Joseph Tranzillo and Codey Swadling from our Australian member firm Corrs Chambers Westgarth have examined the key aspects of the statement and the Commissioner’s stated views, which can be read in full here.
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