Pepsi Australia Contracts Under Fire as Tax Case Concludes

PepsiCo derived not only Australian tax benefits but substantial US tax benefits as a result of contracts between the drinks giant and its bottler, the Australian Tax Office told the Federal Court Friday.

The ATO was appearing at a hearing in Pepsi’s appeal against a November lower court finding it was liable to pay royalty taxes under a contract granting an Australian bottler a “royalty-free” license.

The appeal court also heard arguments on the lower court’s approval of a 40% diverted profits tax, used to deter multinational tax avoidance, potentially being applied to Pepsi as an alternative to royalties tax. ...