PepsiCo Decision – landmark judgment regarding the application of Royalty Withholding Tax and Diverted Profits Tax

Wednesday, 28 February 2024

Arrival from 5:30 pm.
Seminar commences at 5:45 pm, followed by refreshments and networking.

The IFA Australian Branch is pleased to invite you to the following in person event (livestreamed for interstate participants).

In a significant decision on 30 November 2023, Moshinsky J of the Federal Court held that certain payments made in relation to Bottling Agreements were royalties and thus subject to royalty withholding tax or in the alternative, that diverted profits tax would apply. The ATO was successful in arguing that certain portions of the payments under the Bottling Agreements were royalties and thus subject to royalty withholding tax limited to 5% under the US/Australia double tax agreement.

The Court in principle determined that the relevant royalty component was 5.88% of Schweppes Australia Pty Limited’s net revenues from sales (subject to further revision/adjustment) ie relating to the use of, or right to use the relevant trade marks and other intellectual property.

While the decision deals with the very specific circumstances of the sale of beverage concentrate, bottling arrangements and related intellectual property including trademarks, branded packaging and similar arrangements, on one view the Pepsico decision was very much decided on its particular facts and the agreements/documentation in these circumstances.

Clearly, the Pepsico decision, while on appeal, will likely have wide-ranging implications for the access to and use of, intellectual property across a broad range of sectors and on recent ATO rulings dealing with royalties and related matters, including the licensing/distribution of software and DEMPE of intangibles.

Please join us for this timely and insightful in-person panel discussion.

Please register using the form here by Friday 23 February 2024

Panellists

Jock McCormack

Member of the Executive Committee (and Treasurer), Australian Branch of IFA, Chairman, Tax Committee of Infrastructure Partnerships Australia and Senior Tax Partner, DLA Piper

Jock advises a broad range of Australian and foreign based multinational corporations and funds, and is a leading international tax lawyer based in Sydney. He has previous international tax experience based in New York and New Zealand. Jock is an advisor to the Australian Treasury on the Tax Treaties Advisory Panel and the Digital Tax Working Group. He is a graduate of Economics and Law from the University of Sydney and has had guest lecturing roles at the University of Technology, Sydney and New York University.

Julianne E Jaques KC

Barrister, Victorian Bar

Dr Julianne Jaques KC is a barrister with chambers in both Melbourne and Sydney.  She is a chartered accountant and chartered tax adviser and holds a doctorate from the law faculty of the University of Melbourne.  Julianne has appeared in all higher Federal, Victorian and News South Wales courts, including the High Court in Commissioner of Taxation v Sharpcan Pty Ltd 269 CLR 370 and Bywater Investments Limited v Commissioner of Taxation 260 CLR 169.

The Tax Institute recognised Julianne as their Chartered Tax Adviser of the Year in March 2021 from an eligible membership of over 7,000.

Julianne is a current member of the Federal Government’s Board of Taxation and the Independent Parliamentary Expenses Authority, and a former member of the Tax Practitioners Board.

Amanda Kazacos

Senior Associate, King & Wood Mallesons

Amanda Kazacos is a Senior Associate in the taxation team at King & Wood Mallesons where she advises on all aspects of taxation law for large multinational corporations including on corporate acquisitions, divestments and restructures and international tax issues.

Amanda is currently on the NSW Engagement Committee of the Tax Institute of Australia and Australian WIN representative of IFA.