Company: TEAM
Filing Date: 2025-10-31
Form Type: 10-Q
Source: 0001650372-25-000068
Chunk: 204

Company: Atlassian Corp
Filing Date: 2025-10-31
Form: 10-Q
Item: Part II, Item 1A
Chunk 204
---
 shifting which seek to establish certain international standards for taxing the worldwide income of multinational companies. These measures have been endorsed by the leaders of the world’s 20 largest economies.

In March 2018, the EC proposed a series of measures aimed at ensuring a fair and efficient taxation of digital businesses operating within the EU. As collaborative efforts by the OECD and EC continue, some countries have unilaterally moved to introduce their own digital service tax or equalization levy to capture tax revenue on digital services more immediately. Notably, France, Italy, Austria, Spain, the UK, and Turkey have enacted this tax, generally 2% on specific in-scope sales above a revenue threshold. The EU and the UK have established a mandate that focuses on the transparency of cross-border arrangements concerning at least one EU member state through mandatory disclosure and exchange of cross-border arrangements rules. The mandate is further extended to include certain domestic arrangements in Poland. These regulations (known as MDR in the UK and Poland and DAC 6 in the other EU countries) require taxpayers to disclose certain transactions to the tax authorities resulting in an additional layer of compliance and requiring careful consideration of the tax benefits obtained when entering into transactions that need to be disclosed.

The OECD introduced significant changes to the international tax law framework through the Pillar Two guidelines. The framework outlines a coordinated set of rules to prevent multinational enterprises from shifting profits to low-tax jurisdictions by implementing a 15% global minimum tax. Many countries in which we operate, including the member states of the EU, have enacted Pillar Two. Pillar Two rules began applying to us in fiscal year 2025. In January 2025, the United States issued an executive order announcing opposition to aspects of these rules. In late June 2025, a shared understanding of a new “side-by-side” solution to address U.S. concerns with Pillar Two was announced. If agreed upon and legislated by the OECD countries, this would exclude U.S.-parented groups from certain provisions of Pillar Two. The potential effects of Pillar Two may vary depending on the specific provisions and rules implemented by each country that adopts Pillar Two and may include tax rate changes, higher effective tax rates, potential tax disputes and adverse impacts to our cash flows, tax liabilities, results of operations and financial position.

Global tax developments applicable to multinational companies may continue to result in new tax regimes or changes to existing tax laws, regulations, and taxation officer interpretations. If the U.S. or foreign taxing authorities change tax laws, our overall taxes could