Pepsico Ruling Blesses Powerful Tool for Australia’s Tax Cops

Australia has a tough, newly validated weapon to go after multinational companies it sees as tax dodgers—and US technology and pharmaceutical companies may take a hit.

A recent court ruling against Pepsico Inc. blessed the Australian Taxation Office’s use of the country’s “diverted profits tax,” a previously untested measure that could slam companies with a 40% tax rate on the amount of those profits. It’s the first time a court passed judgment on the validity of the DPT, which was enacted in 2017. The tax is a powerful tool for Australian authorities to use against multinationals they contend are avoiding ...