In June 2024, the Full Federal Court of Australia ruled in favour of PepsiCo against the tax authorities, overturning an earlier decision. The case involved potential embedded royalties in beverage concentrate agreements, focusing on withholding tax and the diverted profits tax. Beyond the ruling, the case highlighted key international tax issues like substance over form, transaction recharacterization and the principal purpose test. The differing views among the three judges emphasized the complexity of these concepts, suggesting future disputes are likely.