This second video on the AU PepsiCo case deals with diverted profits tax and the embedded IP issue.

The problem is that all the weaknesses on royalty withholding tax from the first video infects and cripples any arguments for a diverted profit tax as well. If there was no royalty due, there also was no diverted royalty under a DPT. It is also here where the judge's lack of understanding (why 1 price is better than 2) trips him up. And it is here where the lack of thorough investigation seems to continue to bedevil the decision:
1. why was there an Australian entity called "Singapore" to essentially receive the payment for the syrup Schweppes and pass it on to its true Singaporean parent? Here may lie a true, but different, argument for applying a DPT.
2. how did PepsiCo report this income in its own Singaporean and US tax returns?
3. what was the title of any payments made from Singapore to the US and when were they made. It is difficult to claim PepsiCo was the beneficial owner, if these questions are not looked into. It is impossible to apply the AUUS treaty, if PepsiCo was not.
3.1 Whether PepsiCo was the beneficial owner of payments cannot be determined without first hypothesising the transaction between Singapore and PepsiCo. Unlike the judge claim, Singapore was not merely an agent receiving monies on behalf of PepsiCo, it was the manufacturer of syrup sold to Australia. It could have done that in a capacity of toll manufacturer, contract manufacturer or fully fledged manufacturer. In the latter case, PepsiCo was not the beneficial owner of the payments from Australia. Without investigating this issue, any beneficial ownership conclusion rests on shaky grounds.

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Link to first video    • PepsiCo, Inc v Commissioner of Taxati...  

Decision
https://www.judgments.fedcourt.gov.au...

Judge Moshinsky background
https://www.fedcourt.gov.au/about/jud...