International Tax Update: 5 Cross-Border Changes
What changed this week
| Development | Who it affects |
|---|---|
| Australia: New ATO Ruling Reshapes Withholding Tax on Cross-Border Software Payments | US software vendors, SaaS companies, resellers, and Korean or other Asia-based groups with US or Australian subsidiaries that license, distribute, or resell software into Australia. |
| OECD: Digital Platform Sellers Face Updated Reporting Rules After Global Consultation | US-based e-commerce sellers, dropshippers, and marketplace operators on platforms such as Amazon, eBay, and Etsy with cross-border sales, plus Korean or Asian sellers using US or EU-based marketplaces. |
| United States: New IRS Rules Change How US Shareholders Count CFC Income | US individuals and companies — including Korean or Asian parent groups with a US entity in the ownership chain — that own 10% or more of a foreign subsidiary treated as a CFC, especially where ownership changed mid-year in 2026. |
| OECD: Transfer Pricing Guidelines for Intercompany Services Head for a Rewrite | Any US business with a foreign parent, subsidiary, or affiliate that charges or receives intercompany management, administrative, IT, HR, or other shared-service fees — a very common structure for Korean or Asian parent groups with US operating subsidiaries. |
| Thailand: Reduced 7% VAT Rate Extended Through September 2027 | US, Korean, and other foreign businesses importing goods into Thailand, selling through Thai subsidiaries or distributors, or invoicing Thai customers for services subject to Thai VAT. |
Australia: New ATO Ruling Reshapes Withholding Tax on Cross-Border Software Payments
On 4 September 2026, the Australian Taxation Office (ATO) finalized Taxation Ruling TR 2026/2, Income tax: royalties — character of payments in respect of software and intellectual property rights. The ruling sets out the Commissioner of Taxation’s interpretation of when cross-border payments for software and IP rights are treated as royalties for Australian withholding tax purposes, including payments made under ‘software intermediation arrangements’ such as reseller, distributor, and platform arrangements. The final ruling departs in some respects from the Commissioner’s earlier draft position, generally finding that a payment is a royalty where it is made for the use of, or the right to use, copyright or a similar right in the software — not merely for the right to distribute or access a program for one’s own use. Alongside the ruling, the ATO released an expanded draft Practical Compliance Guideline, PCG 2026/D4, which sets out ‘lower risk’ and ‘higher risk’ zones for how the ATO will allocate compliance resources when reviewing cross-border software payment arrangements. Public comments and submissions on the draft PCG close on 2 October 2026.
Who it affects: US software vendors, SaaS companies, resellers, and Korean or other Asia-based groups with US or Australian subsidiaries that license, distribute, or resell software into Australia.
What to do
Review existing Australian distribution, reseller, and platform contracts against the new royalty characterization test, confirm withholding tax positions on 2026 payments, and consider submitting comments on draft PCG 2026/D4 before 2 October 2026 if the risk zones affect your arrangement.
Primary source: Australian Taxation Office (ATO)
OECD: Digital Platform Sellers Face Updated Reporting Rules After Global Consultation
The OECD has published the public comments it received on a June 2026 consultation document proposing targeted amendments to the Model Reporting Rules for Digital Platforms (MRDP) — the framework, implemented in more than 30 jurisdictions, that requires online marketplaces and platform operators to collect seller information and report certain seller income to tax authorities for automatic exchange. The original rules, approved in 2020 and expanded in 2021 to cover sales of goods and the rental of means of transportation in addition to gig-economy services, have surfaced practical implementation issues as jurisdictions began applying them, particularly around identifying and reporting ‘intermediary’ sellers who resell on behalf of others rather than selling in their own name. The proposed targeted amendments and updated commentary aim to close these gaps and improve the consistency of seller-income reporting across participating jurisdictions, which already includes the EU’s parallel DAC7 regime. Because reporting under the model rules feeds into automatic exchange of information between tax administrations, a gap between what a platform reports and what a seller declares on its own return is a common trigger for follow-up inquiries. A technical follow-up on the amendments is expected later in 2026.
Who it affects: US-based e-commerce sellers, dropshippers, and marketplace operators on platforms such as Amazon, eBay, and Etsy with cross-border sales, plus Korean or Asian sellers using US or EU-based marketplaces.
What to do
Confirm your marketplace account has your correct taxpayer ID and business information on file, expect continued reporting of your platform sales to tax authorities in jurisdictions where you sell, and reconcile the 1099-K or DAC7-style statements you receive against your own books.
Primary source: OECD — Model Reporting Rules for Digital Platforms
United States: New IRS Rules Change How US Shareholders Count CFC Income
The US Treasury Department and IRS released proposed regulations (REG-115646-25), published in the Federal Register on 26 August 2026, implementing changes the One Big Beautiful Bill Act (OBBBA) made to sections 951 and 951A of the Internal Revenue Code — the core rules governing when a US shareholder must include in income its pro rata share of a controlled foreign corporation’s (CFC) subpart F income, tested income (GILTI/NCTI), or tested loss. The proposed regulations eliminate the prior ‘last day’ rule, under which a US shareholder’s inclusion generally depended on stock ownership on the final day of the CFC’s tax year, and replace it with a daily-proration approach: income or loss is generally allocated based on the number of days during the CFC’s tax year that the US shareholder actually held the stock. The proposed rules also require a CFC’s tax year to close upon certain ownership-change events, and allow an elective closing when more than 50 percentage points of ownership shifts to unrelated parties. The changes generally apply to tax years of foreign corporations beginning after 31 December 2025. Written comments and requests for a public hearing are due by 26 October 2026, and taxpayers may rely on the proposed rules before finalization if applied consistently and in full.
Who it affects: US individuals and companies — including Korean or Asian parent groups with a US entity in the ownership chain — that own 10% or more of a foreign subsidiary treated as a CFC, especially where ownership changed mid-year in 2026.
What to do
Model your 2026 subpart F and GILTI/NCTI inclusions under the new daily-proration method now, especially for any CFC bought, sold, or restructured during the year, and consider submitting comments before 26 October 2026 if the transition rules affect a pending transaction.
Primary source: US Federal Register / Government Publishing Office
OECD: Transfer Pricing Guidelines for Intercompany Services Head for a Rewrite
The OECD has published the public comments it received on a consultation document proposing revisions to Chapter VII of the OECD Transfer Pricing Guidelines, which governs the arm’s-length pricing of intragroup services — the management fees, shared-service charges, and low value-adding services that most multinational groups charge between related entities. Chapter VII was last substantively updated as part of the 2017 OECD Transfer Pricing Guidelines following the BEPS project, and this review is being carried out alongside a parallel review of Chapter IV on administrative approaches to avoiding and resolving transfer pricing disputes. More than 100 comments were submitted by businesses, advisers, and other stakeholders on proposed updates and modernization of the existing guidance, including a new annex with more than 20 additional worked examples intended to reduce disputes over whether a service was actually rendered, how it should be priced, and when the simplified low value-adding services safe harbor can be used. The OECD has scheduled a public consultation meeting for 9 November 2026 in Paris to discuss the results before finalizing the revised chapter.
Who it affects: Any US business with a foreign parent, subsidiary, or affiliate that charges or receives intercompany management, administrative, IT, HR, or other shared-service fees — a very common structure for Korean or Asian parent groups with US operating subsidiaries.
What to do
Review your intercompany services agreements and transfer pricing documentation now against the proposed new examples, and flag any charges relying on the low value-adding services safe harbor for a fresh look once the revised chapter is finalized.
Primary source: OECD — Transfer Pricing Guidelines Public Consultation
Thailand: Reduced 7% VAT Rate Extended Through September 2027
Thailand’s Cabinet approved a royal decree extending the country’s reduced value-added tax rate of 7% (6.3% plus local tax) on goods, services, and imports for an additional year, from 1 October 2026 through 30 September 2027, rather than letting it revert to the statutory 10% rate. The Revenue Department announced the extension, the latest in a long, unbroken chain of one-year royal decree extensions Thailand has issued since introducing the reduced rate after the 1997 Asian financial crisis, and stated the measure is intended to support household consumption and business confidence. Because the reduced rate has never been made permanent, businesses invoicing Thai customers, importing into Thailand, or operating a Thai subsidiary or branch need to watch each annual renewal rather than assume 7% is locked in for good — if a future extension is not issued in time, the rate automatically reverts to 10% at the start of the following month.
Who it affects: US, Korean, and other foreign businesses importing goods into Thailand, selling through Thai subsidiaries or distributors, or invoicing Thai customers for services subject to Thai VAT.
What to do
Keep invoicing, customs, and ERP tax-rate tables set to the 7% rate through 30 September 2027, and build the scheduled reversion date into any multi-year Thai pricing or contract models.
Primary source: The Revenue Department of Thailand
What this means for your business
- A finalized ATO ruling gives cross-border software and IP licensing payments into Australia a clearer — and in some cases stricter — withholding tax test.
- Marketplace sellers should expect tighter, more consistent seller-income reporting worldwide as the OECD works to close gaps in the digital platform reporting rules.
- US shareholders of foreign subsidiaries must re-model subpart F and GILTI/NCTI inclusions under new daily-proration ownership rules — comments are due October 26, 2026.
- Thailand’s 7% VAT rate is locked in through September 2027, while intercompany service charges face a coming rewrite of OECD transfer pricing guidance.
This Week in International Tax
Five cross-border tax changes — from Australian software royalty withholding to new US CFC income rules and an extended Thai VAT rate — that international business owners need on their radar now.
Frequently asked questions
Q. Do these international tax changes apply if my business is only US-based with no foreign entity?
Most of these items only apply if you have cross-border activity — a foreign subsidiary, a foreign parent, sales into another country, or payments to or from a foreign related party. If your business is purely domestic with no foreign ownership, licensing, or sales, none of these five items creates a new filing obligation for you.
Q. What is the most urgent deadline in this digest?
The October 26, 2026 comment deadline on the US Treasury’s proposed regulations under sections 951 and 951A is the most time-sensitive item, especially for businesses with a controlled foreign corporation that changed ownership during 2026. The ATO’s draft compliance guideline comment deadline of October 2, 2026 is also approaching quickly.
