IKEA confirms tax audit by ATO

In a statement, Ikea Australia has said: “IKEA Pty Limited can confirm it is currently the subject of an ATO audit covering 2016 – 2020 income years.”

“The audit has been taking place over several years and we have worked collaboratively with the ATO to assist with its enquiries throughout the process.”

Despite acknowledging the audit, the retail giant’s Australian business said it “strongly disagree[s]” with the audit’s position, intending to “dispute any tax related liability that may arise.”

In addition, it considered the payable tax contained in the audit as not probable, and that, as a result, no provision has been set aside for payment.

A booming business

The Australian reported that the ATO served on the IKEA group position papers during the 2025 financial year that related to “historical transfer pricing and royalty withholding tax matters.”

In the 2025 financial year the company’s revenue reached $1.765 billion, up from $1.725 billion the previous year. Despite mammoth sales, its profits reached just $91.16 million, its highest revenue since its opening in 1975, followed closely by a previous high of $82 million in 2022.

IKEA Australia currently has 10 stores across the country and recently purchased land for its Innaloo, Perth store for $163.75 million from GDI No.43 Property Trust.

In a statement on the acquisition, on 19 June 2025, it confirmed: “IKEA Australia now owns the land and buildings for its Perth store including the 4 peripheral buildings leased to external tenants.”

Transfer pricing

As reported by The Australian, in position papers from the ATO served on IKEA Australia last year, the Tax Office allegedly stated that its main concern surrounded the retailer’s transfer pricing arrangements.

In light of these concerns, a 2025 tax report published by one of Ikea’s largest franchisee holding companies said: “We conduct intragroup transactions at arm’s length and are fully committed to comply with obligations under transfer pricing rules in the jurisdictions where we operate, and under global transfer pricing principles.”

When position papers are offered to a corporate taxpayer, it is the third of a six-stage process for when the ATO opens a dispute case, with the fifth stage being litigation, law firm Arnold Bloch Leibler told The Australian.