PepsiCo Inc.’s victory on royalty taxes in an Australian appeals court stands to pose an obstacle for the nation’s tax authorities as they continue their crackdown on multinational companies. 

“The decision underscores how important it is for companies to draft their contracts properly and precisely when dealing with trademarks or other valuable intangibles,” said USCIB’s Senior Vice President for International Tax Counsel Rick Minor. 

“The ruling ‘adds insight’ as to when embedded royalties might be found in a transaction under Australian law even when companies didn’t intend them, and companies should try to eliminate any ambiguities in their arrangements that might prompt tax authorities to initiate an audit,” Minor continued. 

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