Australia’s High Court Ruling: Impact on Customs Value Unbundling and Multinational Tax Strategies

• The Australia High Court ruled in favor of PepsiCo in a case involving customs value and embedded royalties.
• The decision highlights the complexity of structuring payments to manage tax risks for multinationals and importers.
• Including all costs in the price of goods can increase customs values and duties, while excluding certain costs can lead to withholding taxes.
• Customs valuation planning is used to reduce the dutiable value of goods based on international trade agreements.
• In Australia, specific laws dictate what costs must be added or can be deducted to determine customs value.
• Intellectual property costs included in the price cannot be deducted, but some IP costs do not need to be added, reducing customs value.
• The High Court found that payments made under Exclusive Bottling Agreements did not include royalties, avoiding additional tax liabilities.
• Businesses should consider the customs valuation impact when structuring prices for imported goods.

Source: bdo.global

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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