Australia vs PEPSICO: JUDGMENT
Case Information
- Court: Federal Court of Australia
- Case Number: VID 53 of 2022; VID 55 of 2022; VID 56 of 2022; VID 57 of 2022; VID 74 of 2022; VID 82 of 2022
- Applicant: PepsiCo, Inc and Stokely-Van Camp, Inc (SVC)
- Defendant: Commissioner of Taxation
- Judgment Date: 30 November 2023
This case, decided by the Federal Court of Australia on 30 November 2023, addressed key taxation issues involving royalty withholding tax and diverted profits taxDiverted Profits Tax (DPT) is a tax measure designed to counteract aggressive tax avoidance by multinational enterprises (MNEs). It aims to address arrangements where profits are artificially shifted to jurisdictions with lower tax rates or where transactions lack genuine economic substance. Introduced initially by the United Kingdom in 2015, DPT is sometimes informally called the "Google Tax" due to its... in the context of multinational enterprisesWhat are Multinational Enterprises (MNEs)? Multinational Enterprises, commonly referred to as MNEs, are corporations that operate in multiple countries through various subsidiaries, branches, or affiliates. These entities maintain a central management structure while leveraging diverse resources, labour markets, and customer bases across borders. The fundamental aspect that distinguishes MNEs from other corporate forms is their cross-border activity, which can include... (MNEsWhat are Multinational Enterprises (MNEs)? Multinational Enterprises, commonly referred to as MNEs, are corporations that operate in multiple countries through various subsidiaries, branches, or affiliates. These entities maintain a central management structure while leveraging diverse resources, labour markets, and customer bases across borders. The fundamental aspect that distinguishes MNEs from other corporate forms is their cross-border activity, which can include...). PepsiCo, Inc and SVC, both US-based entities, entered into exclusive bottling agreements (EBAs) with Schweppes Australia Pty Ltd (SAPL), an Australian company. These agreements granted SAPL the right to manufacture, sell, and distribute beverages using PepsiCo’s trademarks and intellectual propertyIntellectual Property (IP) refers to creations of the mind, including inventions, literary and artistic works, symbols, names, images, and designs used in commerce. It grants creators exclusive legal rights to use and exploit their work, ensuring protection against unauthorised use or reproduction. These rights are critical in fostering innovation and creativity while providing economic value to individuals and organisations. IP..., without explicitly stipulating royalty payments for intellectual propertyIntellectual Property (IP) refers to creations of the mind, including inventions, literary and artistic works, symbols, names, images, and designs used in commerce. It grants creators exclusive legal rights to use and exploit their work, ensuring protection against unauthorised use or reproduction. These rights are critical in fostering innovation and creativity while providing economic value to individuals and organisations. IP... usage.