The definition of a royalty moved in three places at once.

The 2025 UN Model Tax Convention extends article 12 to payments for software regardless of copyright and replaces the technical services article with a broader fees for services article. New Zealand opened consultation on how payments to non-resident software suppliers should be characterised, and Uganda legislated software into its royalty definition with retrospective effect. The ATO agrees with three propositions in its Alcoa decision impact statement while treating the outcome as turning on highly unusual facts, with submissions closing on 25 September 2026. Pillar Two moved from design to administration in the United Arab Emirates, Qatar and Jersey.

The 2025 UN Model Tax Convention, released on 28 August 2026, carries a set of changes that matter well beyond the countries that will adopt it.

The change most likely to affect Australian outbound groups is to article 12. The royalties definition is expanded to cover payments for software regardless of whether they constitute consideration for the use of copyright. That removes, for treaties following the UN Model, the distinction that has done most of the work in software characterisation disputes: whether the customer acquired rights in the copyright, or merely a copy of a program. Under the expanded definition, that distinction stops being determinative of the article 12 question.

Alongside it, a new article 12AA on Fees for Services replaces the narrower article 12A on Fees for Technical Services and the article 14 on Independent Personal Services, permitting source taxation of such payments at a maximum rate to be agreed through bilateral negotiation. A new article 12C on Insurance Premiums allows source states to tax insurance premiums on a gross basis, with the insurance permanent establishment provision formerly in article 5(6) retained as an optional Commentary provision. New article 5A deems a permanent establishment for exploration or exploitation of natural resources carried on for more than 30 days in the aggregate in any twelve-month period. Article 8 has been reordered, with Alternative A revised to allow the source state to tax income from international transport. Article 25 gains provisions governing the interaction between tax treaties and other agreements, such as trade or investment agreements, particularly on dispute resolution. The phrase "between Developed and Developing Countries" has been removed from the title.

The subject-to-tax rule in the new paragraph 3 of article 1 deserves separate attention. It applies to payments of income between related and unrelated parties, and it provides that treaty limitations on source-state taxation do not apply unless the income is subject to tax in the residence state at a rate not lower than a minimum rate agreed bilaterally. That is a materially broader instrument than the OECD subject-to-tax rule, which is confined to connected persons and to specified categories of covered income.

New Zealand's exposure draft PUB00266, released on 2 September 2026, approaches the same territory from the administrative side. It sets out the classification of payments by New Zealand resident customers or distributors to non-residents across seven supply types: cloud computing services, sales of copyright rights, licensing of copyright rights, sales of copyrighted articles, leasing of copyrighted articles, supplies of know-how, and supplies of development, modification or other services. Payments are generally characterised as consideration for services, as the sale of a capital asset, as the use of or right to use intellectual property or know-how, as the sale of goods, or as a lease of goods. Inland Revenue notes that where a New Zealand entity resells cloud computing services to New Zealand customers, payments between the reseller and the non-resident provider are generally for services, but in some circumstances may be both for services and for the use of intellectual property or know-how. Withholding may arise on royalties, on the interest element where a lease of a copyrighted article falls within the finance lease rules, and under the non-resident contractors' regime in limited cloud computing cases, in other services where personnel are present in New Zealand, and in copyrighted article leasing arrangements. Submissions close on 31 October 2026.

Uganda's Income Tax (Amendment) Act 2026, assented on 20 August 2026 and retrospective to 1 July 2026, expands the royalty definition to expressly include payments made as consideration for software. The same Act introduces a statutory requirement that a person who has entered into a controlled transaction account for it consistently with the arm's length principle, and redefines tax EBITDA for interest limitation purposes as gross income less allowable deductions excluding interest, depreciation and amortisation, so that brought-forward tax losses no longer reduce the deductible interest computation.

What clients should do. None of this is Australian law, and the Australian analysis continues to run through the section 6(1) definition, the applicable treaty article and the Commissioner's guidance on embedded royalties. The practical value is in the direction. For any group licensing software, granting access to a platform, or supplying cloud services into multiple jurisdictions under a single global agreement, the characterisation question is now being asked in more places, and a contract drafted for one revenue authority's analysis is unlikely to satisfy all of them. It would be sensible to identify which agreements are relied on across several jurisdictions and whether the consideration in each is separately identified for the distinct things being supplied. Where a single fee covers software access, implementation, support and know-how, splitting it in the agreement is generally easier than splitting it in an audit.

On 27 August 2026 the ATO released its decision impact statement on Alcoa of Australia Ltd and Commissioner of Taxation [2025] ARTA 482.

The case concerned sales of smelter grade alumina between 1993 and 2009, shipped from Alcoa's Perth refinery to a smelter in Bahrain operated by Aluminium Bahrain BSC. Part of the tonnage was invoiced to Alba directly on a Formula Tonnage pricing basis. The remainder was invoiced on a Market Tonnage basis to an entity associated with an intermediary, in the main Alumet, which then invoiced Alba at marked-up prices. From 2002 a distribution agreement operated under which Alcoa supplied the intermediary with all the alumina for Alba, with no further direct sales. Alcoa had no shareholding or common directorship association with Alba or the intermediary, and it was accepted that they were arm's length parties. The Commissioner nonetheless contended that Alcoa and the intermediary were not dealing at arm's length, relying on United States bribery and corruption proceedings and on admissions made by Alcoa World Alumina LLC and the parent, Alcoa Inc, rather than by the Australian taxpayer, that Alcoa knew or consciously disregarded that the intermediary had been inserted into the supply chain and imposed a mark-up used to enrich himself and pay bribes. There were no allegations of profit shifting within the Alcoa group.

The Commissioner made determinations under former section 136AD(1) of the Income Tax Assessment Act 1936 for the 1993 to 1995 and 1997 to 2009 income years, producing an aggregate adjustment to taxable income of $643,982,008 and an aggregate shortfall of $213,613,594, contending that Alcoa colluded to reduce the consideration it would otherwise have received by some USD 420 million.

The Tribunal was not satisfied that the parties were dealing at arm's length, so paragraph 136AD(1)(b) was met. It was satisfied that the consideration Alcoa received was not less than an arm's length consideration, so Alcoa discharged its burden of proving the assessments excessive. The reasoning on consideration is the part worth reading. The Tribunal held that paragraph 136AD(1)(c) required evaluation of the consideration received "in respect of the supplies", and that the words "in respect of" broadened the scope to encompass all the promises made under the arrangements, including both Formula and Market Tonnage. The test was not whether the Commissioner could establish an arm's length consideration but whether the taxpayer received one. The evidence established that price negotiations were conducted wholistically and that the two tonnages were viewed and priced as a package, so ignoring the Formula Tonnage would change an integral characteristic of the actual supply, contrary to Federal Commissioner of Taxation v Glencore Investment Pty Ltd [2020] FCAFC 187, in which depersonalisation when identifying the hypothetical transaction was required to remain close to the actual transaction. For 1993 to 2001 the correct comparator was the average of the Market Tonnage and Formula Tonnage prices actually received. For 2002 to 2009 the Commissioner's own evidence indicated Alcoa received more than the predicted arm's length consideration.

The ATO agrees that it is for the taxpayer to prove the parties were dealing at arm's length. It agrees that dealing at arm's length does not require common control or other association, on the footing that the transfer pricing provisions are directed to profits shifted overseas that ought to have been taxable in Australia, regardless of whether an associated entity received them. It agrees that parties to an arrangement designed to facilitate bribery and corruption are not dealing at arm's length. It takes a different view on the identification of the international agreement, and does not accept that the Market Tonnage supplies were made under a tripartite agreement encompassing the Formula Tonnage terms, noting that the Tribunal saw "some force" in its contentions. On depersonalisation the ATO states that it will continue to apply Chevron Australia Holdings Pty Ltd v Commissioner of Taxation [2017] FCAFC 62, Glencore, and Singapore Telecom Australia Investments Pty Ltd v Commissioner of Taxation [2024] FCAFC 29 at [134], guided by the view that objective attributes or features should be included and that the focus is not on subjective or special factors of the parties involved. The statement records that the decision has no implications for the ATO's advice and guidance products.

Two things follow. The first is that the three accepted propositions are useful and citable in their own right, particularly the acceptance that an absence of association does not answer the arm's length dealing question, which cuts both ways and is worth understanding before it is relied on. The second is that the reasoning on the scope of the relevant consideration, and on how closely the hypothetical must track the actual arrangement, was decided under former Division 13 rather than Subdivision 815-B. The reconstruction provisions in Subdivision 815-B are drafted differently, so the transferability of that reasoning is genuinely open.

What clients should do. Submissions on the decision impact statement close on 25 September 2026. For any group with a live transfer pricing position that depends on the arm's length conditions being tested against the whole of a commercially integrated arrangement rather than an isolated limb of it, this is the window in which to say so. For everyone else, the point to note is narrower: where a pricing arrangement is negotiated as a package, the evidence that it was negotiated that way is what carried the day, and that evidence is contemporaneous or it does not exist.

Four jurisdictions moved on Pillar Two administration this week. The common thread in the Emirati and Qatari rules is that registration is required even where no top-up tax is payable, and in the United Arab Emirates the late registration penalty attaches per entity rather than per group.

The United Arab Emirates issued its top-up tax guide on scope and registration, TTGREG1, on 26 August 2026. The domestic minimum top-up tax applies for fiscal years beginning on or after 1 January 2025 to constituent entities located in the United Arab Emirates that are members of an MNE group with annual consolidated revenue exceeding EUR 750 million in at least two of the four preceding fiscal years. An entity must register even where its top-up tax is deemed to be zero, including under the de minimis exclusion, the transitional country-by-country reporting safe harbour, the simplified calculations safe harbour, or the initial phase of international activities exclusion. Excluded entities, investment entities, stateless permanent establishments and stateless tax-transparent entities are not required to register, although an excluded entity becomes subject to registration where an election is made not to treat it as excluded. Registration is due by 30 November 2026 for a fiscal year ending before 30 April 2026, and otherwise within seven months of the end of the first in-scope fiscal year. The administrative penalty for late registration is AED 10,000, and where a domestic designated filing entity fails to register entities it represents within the deadline, the penalty applies in respect of each affected entity. Applications go through the EmaraTax portal, and the Authority issues a top-up tax registration number to each entity and, where applicable, a group-level number to the designated filing entity.

The companion guide on excluded entities and investment entities, TTGEIE1, sets out which entities fall outside the charging provision. Primary excluded entities are international organisations, non-profit organisations, pension funds, and an investment fund or real estate investment vehicle that is the ultimate parent entity, together with governmental entities, which the legislation lists but the guide does not cover. Secondary excluded entities are entities at least 95 per cent owned by primary excluded entities that exclusively hold assets or invest funds or carry out ancillary activities, or entities at least 85 per cent owned by primary excluded entities whose income is substantially excluded dividends or excluded equity gain or loss. A pension services entity is not a primary excluded entity, so an entity it owns cannot be a secondary excluded entity. The revenue of excluded entities and investment entities still counts towards the EUR 750 million threshold, and a Pillar Two information return must still carry structural information on all of them. The guide is explicit that qualifying as an exempt person or qualifying investment fund under the Corporate Tax Law does not automatically produce excluded entity or investment entity status under the top-up tax legislation, and that each entity must self-assess separately. Ministerial Decision No. 133 of 2026 sets out who must file the Pillar Two information return, being each constituent entity other than an investment entity, each joint venture and joint venture subsidiary located in the United Arab Emirates, and each stateless constituent entity that is a reverse hybrid entity created under Emirati law, or a designated local entity appointed on their behalf, with the obligation alternatively discharged where the return is filed by the ultimate parent entity or a designated filing entity in a jurisdiction with a qualifying competent authority agreement in effect.

Qatar published six implementing decisions in Official Gazette No. 14 of 2026 dated 27 August 2026, applying to fiscal years beginning on or after 1 January 2025. Decision No. 17 of 2026 covers currency translation, requiring top-up taxes under both the income inclusion rule and the domestic minimum top-up tax to be paid in Qatari riyals converted at the rate on the last day of the fiscal year, with thresholds determined using Qatar Central Bank rates, failing which European Central Bank rates, failing which a reliable third-party source approved by the Authority. Decision No. 18 of 2026 introduces the transitional simplified jurisdictional reporting framework, allowing most adjustments to financial accounting net income or loss and to current and deferred tax expense to be reported on a net basis rather than entity by entity, available only where no top-up tax liability arises or where one arises but does not need to be allocated entity by entity, for fiscal years beginning on or before 31 December 2028 and excluding any fiscal year ending after 30 June 2030. Decision No. 19 of 2026 introduces the transitional country-by-country reporting safe harbour with the three familiar tests, stated to cover fiscal years beginning on or before 31 December 2027 and excluding any fiscal year ending after 30 June 2029. Both of those dates run a year beyond the outer limits of the safe harbour as it operates generally, so a group relying on them should read Decision No. 19 itself rather than assuming the Qatari and general dates align. Decision No. 20 of 2026 covers the simplified calculations safe harbour for non-material constituent entities. Decision No. 21 of 2026 governs appointment of a designated local entity. Decision No. 22 of 2026 sets registration and deregistration rules: for fiscal years commencing in 2025, registration must be completed by the designated local entity within three months of the platform becoming operational, which the Authority announced on 2 August 2026, giving a deadline of 2 November 2026, and for later fiscal years within six months of the end of the relevant fiscal year.

Jersey published guidance on completing the multinational corporate income tax return, which became available on 1 September 2026 and can only be submitted through the Pillar Two platform, with registration required before submission. Amendment functionality follows in October 2026. The first instalment is due five months after the end of the accounting period, with final payment and the return due at twelve months.

Ireland issued eBrief 125/2026 on 28 August 2026, updating the Tax and Duty Manual on pre-transition adjustments. Reductions in covered taxes relating to fiscal years before a group became subject to Pillar Two are excluded from the effective tax rate computation. Prior-period adjustments affecting deferred tax expense do not affect the current year's effective tax rate calculation, but must be taken into account in determining transition-year deferred tax balances and subsequent reversals.

What clients should do. The common feature of the Emirati and Qatari rules is that registration is decoupled from liability. A group with several dormant or immaterial constituent entities in either jurisdiction, each of which will pay nothing, still has a registration obligation for each of them, and in the United Arab Emirates the penalty for missing it is calculated per entity rather than per group. The most useful thing to do before November is a simple entity-level list, jurisdiction by jurisdiction, of who is registered, who has been assumed to be out of scope, and on what basis. Where the basis is that an entity is an excluded entity or investment entity, the Emirati guidance is a reminder that this is a self-assessment against the top-up tax criteria and not a read-across from domestic corporate tax status.

On 1 September 2026 the Curaçao parliament unanimously adopted the Draft National Ordinance on Minimum Tax, together with a Note of Amendment, introducing a 15 per cent effective minimum tax aligned with the Pillar Two framework for groups with consolidated annual global revenues above EUR 750 million.

The original bill, submitted in December 2025, proposed both an income inclusion rule and a qualified domestic minimum top-up tax. Following the January 2026 Side-by-Side package and consultation with the financial services sector, the government submitted a Note of Amendment on 4 May 2026 deleting all of the domestic minimum top-up tax provisions. Chapter 3 is now fully deleted and marked reserved. The income inclusion rule remains, retained to protect Curaçao-based parent entities from the undertaxed profits rule in other jurisdictions and to signal continued commitment to the framework. The undertaxed profits rule itself is not being implemented, with Chapter 5 reserved for possible future adoption. The Note of Amendment also removed a switch-off clause previously in article 4.1(6) of the draft, on the basis that such clauses can cause a minimum tax regime to be classified as non-qualifying. The ordinance must still be ratified and published in the Public Gazette before entering into force.

This is worth noting because a jurisdiction that had already drafted a qualified domestic minimum top-up tax into a bill has now deleted it before enactment, and the stated reason is the Side-by-Side package. The amendment is recorded as keeping Curaçao aligned with peer jurisdictions that have chosen not to implement a domestic minimum tax, while preserving the option to introduce one later if circumstances change. A domestic minimum tax is the mechanism by which a jurisdiction keeps its own top-up tax revenue rather than ceding it to a parent jurisdiction. A jurisdiction that concludes the revenue is no longer worth the administrative cost of building and running a qualified regime is making a judgment about how much top-up tax it now expects to be collected at all. Curaçao has kept the income inclusion rule, which costs it little and buys protection for its parent entities, and dropped the part that would have required it to build an assessment and collection machine. Whether that becomes a pattern in smaller financial centres is worth watching, because it changes where the top-up tax on a group's low-taxed entities in those jurisdictions actually lands.

Treasury and the Internal Revenue Service released proposed regulations REG-115646-25 on 25 August 2026 under sections 245A, 951, 951A and 951B, implementing the One Big Beautiful Bill Act changes to the pro-rata share rules that govern a United States shareholder's inclusions of subpart F income, tested income or tested loss from a controlled foreign corporation. They are generally proposed to apply to tax years beginning after 31 December 2025.

The Act eliminated the last-relevant-day rule that had governed the pro-rata share rules for more than sixty years, replacing it with an attribution approach under which a shareholder's pro-rata share includes subpart F and tested income attributable to stock it owned during the foreign corporation's tax year while the shareholder was a United States shareholder and the corporation was a controlled foreign corporation. The proposed regulations determine the portion of a corporation's total subpart F or tested income attributable to a shareholder's stock by reference to the number of days the stock was held, following the existing section 1248 regulations, rather than by reference to when the income actually arose. They also provide for mandatory and elective closing of the tax year, allowing an election to close the foreign corporation's tax year where a significant ownership variance occurs, generally a decrease in ownership of 50 per cent or more pursuant to the same plan. The same package proposes terminating the extraordinary reduction rules in Regulation section 1.245A-5(e) and (f), together with Regulation section 1.1502-80(j), for tax years of foreign corporations beginning after 31 December 2025. Taxpayers that follow the proposed regulations consistently and in their entirety may rely on them until they are finalised.

Separately, Treasury and the Service corrected proposed regulations REG-115145-25 under section 898(c), narrowing the foreign taxes eligible for allocation between a specified foreign corporation's short first required year and its succeeding taxable year under the transition-rule election. The definition of a relevant succeeding year tax now requires the related foreign taxable year to begin before the first day, rather than before the last day, of the succeeding taxable year. Those regulations implement the repeal of the one-month tax year deferral previously permitted under section 898(c)(2), for taxable years beginning after 30 November 2025, so affected controlled foreign corporations must align their taxable year with their majority United States shareholder, generally producing a one-month first required taxable year in transition. Comments close on 17 September 2026.

On periodic adjustments, the Deputy Associate Chief Counsel (International) for controversy and litigation said at a transfer pricing symposium in late July 2026 that generic legal advice memorandum AM 2025-001, on the relationship between the general arm's length standard and the specific periodic adjustment rules, clarifies existing law rather than changing policy, is fully consistent with section 482 and the final regulations, revises and supersedes AM 2007-007, and cannot have retroactive effect. Under the 2025 memorandum, examination teams should consider periodic adjustments where actual profits substantially exceed the original pricing assumptions.

On trade, negotiations between the United States and Canada broke down late on 21 August 2026, and additional ad valorem duties of 50 per cent on certain Canadian goods took effect on 22 August 2026. The duties were imposed under section 338 of the Tariff Act of 1930 by three proclamations signed on 20 July 2026, addressing Canadian treatment of United States alcoholic beverages, dairy and motor vehicles. This is the first use of section 338 to impose United States tariffs. A prior proclamation had suspended the duties, originally scheduled for 19 August 2026, while the two governments worked towards a broader agreement, and no agreement was reached before the suspension lapsed. Canada has said its retaliatory measures come into force on 8 September 2026, targeting steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics.

The Congressional calendar is also relevant to anyone modelling further United States tax change this year. The House returned on 31 August 2026 and the Senate returns on 14 September 2026, ahead of mid-term elections on 3 November 2026. Competing continuing resolutions were passed before the recess, funding the government to 11 December 2026 in the Senate version and to 4 December 2026 in the House version, and the two chambers will need to agree during the September session.

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Belgium confirms the Japanese defence surcharge is treaty-covered. On 2 September 2026 the Belgian Ministry of Finance published Circular 2026/C/80, confirming that the 4 per cent Japanese special corporate tax for defence, applicable from 1 April 2026, is covered by the Belgium and Japan income tax treaty of 2016. Article 2(2) extends the treaty to taxes of the same or a similar nature imposed after signature, and the defence surcharge is substantially similar to the corporate tax listed in Japan's covered taxes. The consequence is that it is taken into account for the avoidance of double taxation. Groups with Japanese operations and treaty partners other than Belgium may wish to confirm the equivalent position under their own treaties rather than assume it.

Knights Developments Limited v HMRC [2026] UKUT 00329 (TCC). In a decision published on 25 August 2026 the Upper Tribunal held that profits of an Isle of Man resident company from the development and sale of United Kingdom land were taxable in the United Kingdom as income from immovable property under article 6(1) of the 2018 treaty. HMRC accepted the company was non-resident with no United Kingdom permanent establishment, and assessed GBP 5.4 million of corporation tax across accounting periods ending 2017 to 2021. The Tribunal held that article 6(3), covering income from direct use, letting or use in any other form, gives examples rather than limiting article 6 to rental or use-based income, and that active development amounted in any event to a use of the land; article 13 was inapplicable as it concerns capital gains rather than trading profits. It was the lead case, with HMRC estimating historic refund claims by other taxpayers at up to GBP 1 billion and future revenue at risk at up to GBP 230 million per year. An appeal to the Court of Appeal is possible.

Montenegro's multilateral instrument entered into force on 1 September 2026. Montenegro signed on 12 November 2025 and deposited its final position on 6 May 2026, listing 40 covered tax agreements. Twenty-two treaties are immediately affected, including those with Austria, Belgium, China, Croatia, Cyprus, Denmark, Finland, France, Ireland, Malta, the Netherlands, Portugal, the United Arab Emirates and the United Kingdom. The Montenegro and Romania treaty of 1996 is subject to deferred application under article 35(7)(b) pending Romania's notification.

Malaysia amended its transfer pricing rules with retrospective effect. The Income Tax (Transfer Pricing) (Amendment) Rules 2026, P.U.(A) 300/2026, redefine MNE group as a group of associated enterprises with business establishments in two or more jurisdictions, aligning the Rules with the 2024 Transfer Pricing Guidelines, amend the definition of service in rule 3, and remove subrule 10(3) on the relationships relevant to cost contribution arrangements. Where the Director General makes a transfer pricing adjustment to one party, a corresponding offsetting adjustment may be made to the other on request and with approval. The amendments are deemed to have effect from year of assessment 2023.

Greece proposes to narrow the Law 89/1967 cost-plus regime. A draft bill released for public consultation on 1 September 2026 would establish a new state aid incentive scheme for foreign-capital-financed investment projects and amend the framework for offshore trading and service companies established under Emergency Law 89/1967. The cost-plus method is unchanged, with the 5 per cent statutory margin floor and five-yearly review retained, but its scope would narrow so that only revenue received by bank remittance from abroad, for services provided to recipients abroad, qualifies. Comments close on 16 September 2026 at 9:00 a.m. Groups running Greek shared service centres under the regime should test whether their current revenue mix would still qualify.

Netherlands: an emigration loss on a non-arm's length loan was denied on the error doctrine. In cases 25/132 and 25/2111, decided 14 April 2026 and published 26 August 2026, the Amsterdam Court of Appeal held that a Dutch financing entity that lent USD 210,776,596 to a Kazakh operating company at a commercially unreasonably low interest rate should have capitalised the receivable at market value in 2014 under the total profit principle. On the error doctrine the inspector could adjust that mistake in 2018 when the company's effective management moved to Hungary, with the result that no loss could be claimed on emigration. The difference between nominal and market value was informal capital and increased the cost price of the participation. The District Court had allowed a loss of USD 34,080,678.

Poland proposes a temporary corporate tax surcharge on energy and fuel groups, and extends the pay and refund suspension. Announced by the Council of Ministers on 20 August 2026, project UD459 would raise the 19 per cent corporate rate on a declining basis to 30 per cent in the first tax year after commencement, expected 2027, then 26 per cent, then 23 per cent, returning to 19 per cent from 2030, for taxpayers with annual revenues above EUR 50 million operating in specified energy, fuel and extractive activities, including tax capital groups where one group company conducts an in-scope activity. Separately, the Ministry of Finance proposes extending to 31 December 2028 the suspension of the pay and refund mechanism, which otherwise mandates withholding at 19 per cent on dividends and 20 per cent on interest, royalties and intangible service payments above PLN 2 million without regard to treaty or directive relief.

Russia has confirmed how its Pillar Two response operates from 1 January 2026. The Federal Tax Service clarified that special corporate income tax rules apply to Russian constituent members of MNE groups where four conditions are met simultaneously: the parent is non-resident at 31 December of the relevant period; the parent or an intermediate holding company is resident in a jurisdiction that has introduced a global minimum tax in accordance with the Model Rules at that date; annual consolidated revenue exceeds or may exceed EUR 750 million in each of the two preceding years; and the member's tax burden coefficient is positive and below 0.15. A member meeting all four calculates corporate income tax at 15 per cent, comprising 5 per cent federal and 10 per cent regional, with the base also calculated under special rules. Income from equity participation is excluded.

Elsewhere. The Serbian President signed ratification laws on 31 August 2026 for the treaties with Algeria and Angola, published on 1 September 2026. Saudi Arabia's Council of Ministers authorised the signature of a treaty with Argentina on 1 September 2026. Zimbabwe deposited its instrument of ratification for the multilateral Convention on Mutual Administrative Assistance in Tax Matters on 31 August 2026, entering into force three months after deposit. Malaysia published the synthesized text of its treaty with Ukraine on 3 September 2026. Bulgaria published the synthesized text of its treaty with the United Arab Emirates on 28 August 2026. China ended the individual income tax exemption for dividends and bonuses paid by foreign-invested enterprises to foreign individuals from 1 September 2026. France's mandatory electronic invoicing and transaction data reporting obligation commenced on 1 September 2026 for large and intermediate enterprises, with small and medium enterprises following on 1 September 2027. Verifier access to the European carbon border adjustment mechanism registry opened on 1 September 2026. Belgium's new Penal Code took effect on 1 September 2026, with tax fraud fines running from EUR 2,000 to EUR 4 million and the criminal judge able to impose a fine of up to three times the offender's monetary benefit. Italy issued Protocol No. 239129/2026 on 28 August 2026 governing automated value added tax settlements where the annual return has not been filed, assessable until 31 December of the seventh year following the year of the omitted return, with a 120 per cent penalty reduced to one-third on payment within 60 days. The Slovak government approved a draft bill on 26 August 2026 transposing the ViDA amendments and the distance sales of imported goods framework, and a separate bill would raise the special contribution for refineries from 2.5 per cent to 4 per cent. Sweden published bills on 1 September 2026 proposing electronic filing for coupon tax reporting and a statutory definition of permanent residence at more than 160 days in a calendar year, or more than 120 days where the 120-day threshold was exceeded in the previous year, both proposed to apply from 1 January 2027. Brazil's Federal Regional Court of the 1st Region overturned a suspension of the 12 per cent crude oil export tax on 31 August 2026, holding that the trade chamber resolution and the expired provisional measure were legally distinct instruments. Vietnam issued Resolution 43/2026/QH16 on 24 August 2026 giving a 30 per cent income tax reduction for 2026 and 2027 to enterprises and resident individuals with annual revenue not exceeding VND 10 billion. The Maldives ratified the Fourth Amendment to its Tax Administration Act on 31 August 2026, requiring any person holding information relevant to an audit to provide it within 15 days, replacing house arrest with imprisonment of three to twelve months for failure to file, and preventing appellants from raising grounds not previously put at the objection stage.

Exposure draft on the 30 per cent minimum tax on discretionary trusts: submissions close 18 September 2026. Treasury has released the exposure draft package for the proposed minimum tax on the taxable income of certain discretionary trusts, first announced in the 2026-27 Federal Budget, to apply from 1 July 2028. Rollover relief from income tax consequences is available for three years from 1 July 2027 for taxpayers restructuring out of a discretionary structure into a company or fixed trust. Excluded trusts include charitable trusts, complying superannuation funds, special disability trusts and deceased estates, with income from discretionary testamentary trusts exempt where established for genuine testamentary purposes, and excluded income covering primary production income and certain income relating to vulnerable minors. The package introduces an election for discretionary trusts in existence at 1 July 2028 to be exempt by making fixed distributions to pre-nominated beneficiaries, with no limit on the number of beneficiaries who may be nominated, and with beneficiaries able to be added or changed only on the death of a nominated beneficiary or a family breakdown. Revocation subjects the trustee to the highest marginal rate plus Medicare levy, and distributions inconsistent with the election revoke it automatically. Four draft Bills were released: the core rules to be inserted into the Income Tax Assessment Act 1936, including the new concept of a minimum tax trust and a new definition of fixed trust in proposed section 272-65 of Schedule 2F; the imposition Bill amending the Income Tax Rates Act 1986; the rollover relief Bill amending the Income Tax (Transitional Provisions) Act 1997; and the electable regime Bill. The materials do not address unpaid present entitlements, which the government has indicated will be progressed separately. For groups with an Australian discretionary trust anywhere in the holding chain, including private equity and family office structures above operating entities, the new fixed trust definition is the provision to read first.

Board of Taxation annual report: the thin capitalisation statutory review is due in January 2027. The Board of Taxation released its 2025-26 annual report on 1 September 2026. The statutory review of Schedule 2 of the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share, Integrity and Transparency) Act 2024 is due to be completed in January 2027. Technical points under assessment include whether the de minimis exemption should operate as a net debt deduction concept, whether the amendments have been effective in addressing excessive debt deductions in Australia, and whether further refinements are needed. The report also records the completed redesign of the Voluntary Tax Transparency Code, which commenced on 1 July 2026, and the final report of the Red Tape Reduction Review submitted to government. Peak bodies met the Board on 28 August 2026, with discussion covering the revised definition of debt deductions, eligibility under the third party debt test, equity commitment deeds and performance guarantees, practical concerns with the fixed ratio test, and the operation of the debt deduction creation rules, and a recurring theme that the regime can produce outcomes that do not reflect underlying economic activity. One observation put to the Board is worth recording: the increase in denied debt deductions in 2024 may be driven in part by the interaction of falling earnings and rising financing costs, since in commodity-based sectors declining prices reduced EBITDA at the same time as debt deductions rose when major capital projects moved into operation.

The large market independent review process ends on 30 September 2026. It was confirmed at the August liaison meetings, repeating the earlier stewardship group discussion, that the large market independent review will cease on 30 September 2026 and that the ATO will explore fast-tracking disputes through an arbitration pilot. The model is still being developed and will be consulted on.

AUSTRAC has begun issuing formal notices to professional firms that have not enrolled. AUSTRAC announced on 28 August 2026 that it is issuing formal notices to businesses it considers may be providing designated services without having enrolled. The notices require the business, including lawyers and accountants, to provide information to help AUSTRAC determine whether it is providing regulated services and meeting its obligations. The regime was expanded on 1 July 2026 to cover the legal, accounting, conveyancing, and trust and company service sectors. Groups that operate in-house service entities providing company secretarial or trustee services to related entities should confirm whether any of those services fall within the designated service definitions.

Commonwealth of Australia v Kupang Resources Pty Ltd [2026] NSWCA 161. On 13 August 2026 the New South Wales Court of Appeal dismissed the Commonwealth's appeal and upheld a finding that the Commissioner was liable for knowing receipt of trust property under the first limb of Barnes v Addy. A de facto director had dishonestly breached his fiduciary and statutory duties, and used the proceeds to satisfy tax-related liabilities before the company recovered them. The Court held that unauthorised profits obtained by a fiduciary are held on constructive trust for the principal from the moment of the breach, that the character of the profits as trust property was not altered by their being new property not yet legally owned by the company, and that earlier orders to account did not convert the property into a mere personal claim. The Commissioner has no special immunity from ordinary equitable principles and is not exempt from the enquiries expected of an honest and reasonable recipient of trust property.

EMH IV Pty Ltd as trustee for the EMH IV Family Trust v Commissioner of Taxation [2026] FCAFC 112. On 28 August 2026 the Full Federal Court unanimously dismissed an appeal against the refusal to remit general interest charge on an assessed liability of approximately $9 million. The trustee lodged its year ended 30 June 2015 return on or about 7 June 2016 stating nil tax to pay, having been required to lodge by 16 May 2016. Following audit, the Commissioner assessed on 20 May 2020 with a due date of 7 June 2016. The Court held that the lodgment program's 5 June concession did not extend the lodgment end date but merely remitted an administrative penalty, that the trustee fell within neither class of entity covered by the concession since it was not actually non-taxable and had not paid by the relevant date, and that subsection 5-5(5) of the Income Tax Assessment Act 1997 is concerned with the income tax liability actually assessed rather than the amount stated in the return. The word "actually" preceding "non-taxable" was held to be deliberately chosen to exclude the argument that a taxpayer is non-taxable merely because its agent lodged a nil return. Interest ran from 7 June 2016 across the whole audit period.

Tax Practitioners Board guidance on artificial intelligence. The Board has issued TPB(GS) 55/2026 on the use of artificial intelligence and the Code of Professional Conduct, announced on 22 July 2026. The guidance restates existing obligations rather than creating new ones: the human providing the service must be competent and must supervise those providing services on the practitioner's behalf; firms must have documented processes to verify the accuracy and appropriateness of output for the client's circumstances before it is used; records must correctly document the services provided; and a system of quality management with documented and enforced policies must be maintained. On confidentiality, a practitioner must obtain the client's permission before divulging client information to a third party, which includes an artificial intelligence model or tool depending on how it is configured and used, and that permission may be obtained through the engagement letter or other signed consent. Where tax file number information is handled, additional obligations arise under the Privacy (Tax File Number) Rule 2015.

Tax Ombudsman review of director penalty notices: submissions close 29 September 2026. The Tax Ombudsman announced on 1 September 2026 a systemic review of the director penalty regime, noting that more than 84,000 notices were issued in 2024-25. The review will consider selection of cases, the adequacy of ATO communications, how directors' circumstances are taken into account, consistency of treatment, and the impact on small businesses, with particular attention to coerced directorships and other financial abuse situations. The report is expected by April 2027. Directors of Australian subsidiaries of foreign groups sit within the population the regime reaches, including former directors, so this is worth a submission where the group has experience of the process.

Draft SGD 2026/D1 on payday super and labour hire contracts: comments close 2 October 2026. The draft addresses the superannuation guarantee amount for individuals engaged under a labour contract who are employees under the extended definition in subsection 12(3) of the Superannuation Guarantee (Administration) Act 1992. Qualifying earnings under paragraph 10A(1)(d) includes all payments under such a contract that are in respect of the person's labour. The Commissioner's preliminary view is that the phrase has a limiting effect, so payments for hire of equipment or machinery, the cost of materials, reimbursement of expenses incurred on behalf of the employer, and GST components are excluded, and a mixed amount must be apportioned with records kept of the method used. Paragraph 10A(1)(d) brings in all payments in respect of labour, so it is not limited by the meaning of ordinary times earnings, and overtime and allowances such as an on-call allowance are included even though they fall outside ordinary times earnings. Where an amount qualifies under both paragraph 10A(1)(d) and paragraph 10A(1)(a), it is counted once. SGD 96/2 was withdrawn with effect from 2 September 2026.

Other Australian items. The ATO has published the Local file and Master file 2026 together with the instructions and a summary of changes. Draft LCR 2026/D5 sets out the preliminary view on the standard deduction of up to $1,000 from 1 July 2026. Draft GSTR 2012/3DC updates the ruling on retirement villages and aged care for the Aged Care Act 2024 and the Aged Care Rules 2025, with comments closing 16 October 2026 and the updated ruling to apply from 1 November 2025, and addendum GSTR 2007/1A2 gives effect to the same reforms. Legislative instrument LI 2026/35 sets the grid matching requirements for the Hydrogen Production Tax Incentive, and LI 2026/36 replaces the 2016 concessional spirit guidelines. Addendum WETR 2006/1A6 reflects the increase in the maximum wine equalisation tax producer rebate from $350,000 to $400,000 from 1 July 2026. The share transactions data matching protocol has been revised so that data acquired for the period 20 September 1985 to 30 June 2018, covering approximately 7.47 million entities, may be retained beyond the stated retention periods where a business need exists. Class rulings CR 2026/64 (Qube Holdings scheme of arrangement and dividends) and CR 2026/65 (ClearView Wealth scheme of arrangement and special dividend) have issued, together with product rulings PR 2026/16 and PR 2026/17 and an erratum to CR 2026/61.

Rows overtaken by the passage of time have been retired. Rows drawn from this week's developments are stated from the instrument itself. Rows carried from earlier editions are reproduced as previously published and marked where this week's material does not independently confirm them, so a date being in the table is not by itself a substitute for checking the underlying instrument before relying on it.