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OECD releases the next public consultation document on one of the building blocks of Amount A

In brief

On 27 May 2022, the OECD released a new public consultation document presenting A Tax Certainty Framework for Amount A which will be the subject of this alert. Concurrently, a separate public consultation document dealing with Tax Certainty for issues related to Amount A was published, which is the focus of another alert. With these two new documents, the OECD has now released 7 out of 13 building blocks forming Amount A under Pillar One. As was the case with the previous publications, the latest consultation documents are a work-in-progress and subject to changes. Contrary to the other published building blocks though, there are no draft model rules for the Tax Certainty Framework available yet. The OECD seeks to consult and agree on the structure and operation of the Tax Certainty Framework first before working on any model rules. The OECD welcomes comments from the public no later than 10 June 2022.


  1. Overview
  2. In depth
  3. Outlook


  • The Two-Pillar-Project aims to restore the stability of the international tax framework. Ensuring that the taxpayer has certainty about its tax treatment is an integral part of this endeavor. The now presented Tax Certainty Framework sheds light on how and for which elements of Amount A tax certainty shall be provided.
  • The Tax Certainty Framework contains three different review processes to provide taxpayers with certainty. The Lead Tax Administration, i.e., typically the tax administration which is the authority in charge of the ultimate parent entity of the taxpayer’s group, will have a key role in coordinating the processes. The three review processes are as follows: 
    1. Scope Certainty Review: Taxpayers can request from their Lead Tax Administration a scope review to have binding certainty that they are not in scope of Amount A. As part of the request the taxpayer shall include a list of so-called Listed Parties (i.e., certain parties of the Multilateral Convention) from which Scope Certainty is sought. The request could be submitted shortly after the group’s consolidated financial statements for the last period have been published. The outcome of the review shall be binding for said period. It is also intended to offer high-level follow-up reviews confirming the continuing validity of the scope review. 
    2. Advance Certainty Review: Taxpayers can request a review of their methodology for revenue sourcing, incl. their categorization of revenues, choice of reliable method and internal control framework. In addition, certainty over the application of the (yet to be published) segmentation rules is also mentioned as being part of this review process. In this respect, the group’s attribution of revenues, expenses and other financial reporting items incl. the allocation of central costs to a segment will be of interest. The outcome of the review shall be binding on the tax authorities of so-called Affected Parties for three years, unless a relevant change occurs during that period. The outcome of any subsequent requests for Advance Certainty shall be binding for three to five years. In particular, a jurisdiction is an Affected Party if the taxpayer at hand sources non-excluded revenues from said jurisdiction or if it is required to provide relief for the elimination of double taxation with respect to Amount A.
    3. Comprehensive Certainty Review: Taxpayers can request a review to have binding multilateral certainty over their application of all (!) aspects of the Amount A rules for a specific Period that has ended. This would encompass the MNE group’s calculation and allocation of Amount A as well as the required elimination of double taxation. The outcome of the review process would be binding on all parties to the Multilateral Convention implementing Amount A. 
  • In an ideal scenario, the outcome of any of these review processes may simply be that the case as brought forward by the taxpayer is confirmed by the reviewers. However, the outcome may also take the form of a recommendation according to which the taxpayer should treat certain aspects, e.g., the sourcing of revenues, differently. If the taxpayer does not adhere to such recommendation and does not revise his request accordingly, it is deemed that the taxpayer has withdrawn his request. 
  • If agreement cannot be achieved in any of the three review processes, a binding Determination Panel process shall resolve the case. It is currently under discussion who will sit on said Determination Panel. Independent experts, government officials or a mix of both are options considered. Similar to the concept of baseball arbitration, the Determination Panel will only decide for one of the outcome options that have been presented by the involved tax administrations. In general, a decision shall be based on consensus amongst all panellists, but an overall majority would also be sufficient, if the case so requires. Where the Determination Panel has to decide between more than two alternative outcomes and cannot reach even an overall majority, the final outcome will be selected based on a ranked voting.
  • Having established the various processes as outlined above, it is effectively guaranteed that the taxpayer will obtain tax certainty, even if the taxpayer disagrees. There is an exception, though. If the taxpayer acts in an uncooperative or non-transparent manner, the review process may conclude without any outcome. This may be the case where the taxpayer provides information persistently late without an explanation or provides inaccurate or incomplete information during the review process. 
  • Acknowledging that Amount A brings a whole new set of rules that taxpayers need to digest and incorporate into their internal systems for proper application, it is considered to provide transition rules to make the first few years of implementation less cumbersome. In this regard, two concepts are under discussion. On the one hand, taxpayers may benefit from a “soft landing” meaning that their application of the revenue sourcing rules will be accepted if reasonable efforts have been taken. Alternatively, taxpayers may make extended use of Allocation Keys instead of applying the detailed step-by-step revenue sourcing rules. 
  • The OECD expects that taxpayers will most likely make use of the review processes to benefit from certainty. Nonetheless, the Tax Certainty Framework provides tax administrations with the possibility to collaborate on a voluntary basis and review an MNE’s application of Amount A in the absence of a taxpayer’s request. If tax administrations decide to pursue such review process, the taxpayer may still make a late request for a Comprehensive Certainty Review to ensure receipt of an outcome that is binding on all parties of the Multilateral Convention and not just on the ones that initiated the review. 

In depth

Tax certainty has been a key selling point to get stakeholders on board for pursuing the Two-Pillar-Solution. The Tax Certainty Framework as outlined in the Overview section above has ambitious goals. Its overarching aim is to be an innovative, effective, resource-efficient and administrable regime combining elements of dispute prevention and dispute resolution. The following points are worth noting in addition to the Overview section above:

  1. Depending on the review process the parties that will sit at the table vary:
    • For the Scope Certainty Review, the Lead Tax Administration is involved as well as a separate Scope Review Panel of tax administrations, if need be. The latter would be the case where the MNE group has excluded revenues, total revenues above EUR 20 billion and one or more disclosed segments, or is a fragmented group. 
    • For the Advance Certainty Review, the Lead Tax Administration is involved as well as a number of tax administrations from countries in which the MNE group has in-scope revenues. In addition, an Expert Advisory Group of tax officials shall support this process by performing a review of the group’s internal control framework, business and financial management systems and ERP software. It is not precisely clear what the Expert Advisory Group review involves, and for example what type of access it would need to often highly sensitive and secure taxpayer information.
    • Lastly, for the Comprehensive Certainty Review, the Review Panel consists of the Lead Tax Administration and a number of tax administrations from countries in which the group has in-scope revenues or which have to provide relief for double taxation. In addition, tax administrations that expressed interest to participate will be selected at random. The above mentioned Expert Advisory Group will again be involved. 
    • Despite having established the above-mentioned review institutions, any competent authority of any Affected Party (see above) may provide input, raise concerns or suggest alternative outcomes as part of the Advance or Comprehensive Certainty Review. It is assumed that this further shows the intent of the OECD to make the tax certainty process as inclusive as possible of all jurisdictions, though the potential for significant disagreements and delays is likely to increase as a result. 
  2. As mentioned above, the Lead Tax Administration will be in charge of coordinating the review processes. This will include the exchange of preliminary outcomes/recommendations amongst the involved reviewers and seek their input before concluding on an outcome. In relation to the MNE group at hand, the Lead Tax Administration will act on behalf of all other parties involved. It is also noted that a new Tax Certainty Secretariat body will be set up to support the certainty processes.
  3. The Scope Certainty Review may be of particular interest for large MNEs in borderline cases. This could be, e.g., a group that generally meets the revenue and profitability scope thresholds but has a mix of excluded revenues and non-excluded revenues (Regulated Financial Services Exclusion; Extractives Exclusion). Another example could be a group for which the (yet to be published) segmentation rules will be decisive. 
  4. As mentioned above, the Scope Certainty outcome is only binding on the parties that were included on the list of Listed Parties. Hence, contrary to the Comprehensive Certainty Review the outcome is not automatically binding on all parties of the Multilateral Convention. Nonetheless, the Lead Tax Administration shall notify the competent authorities of all other parties to the Multilateral Convention that are not included on the list and they may ask to be added. Taxpayers should therefore carefully consider their suggested list of Listed Parties. Countries that generally should be on the list are: jurisdiction of the UPE, jurisdictions where excluded revenues are generated or sourced from (for the extractive industry based on exploration licenses and for the regulated financial services industry based on headcount), and jurisdictions where segmented businesses operate and source their revenues from. 
  5. The Advance Certainty Review with regards to the application of the revenue sourcing rules is likely of interest for all in-scope MNEs, as it is fundamental to the operation of Amount A. Likewise, it can be expected that potential market jurisdictions will show significant interest in this review process as it will determine their share of Amount A taxation. 
  6. It is envisaged that the Comprehensive Certainty Review will be performed in two phases. In the first phase, the following elements would be subject to review: definition of the group, application of the revenue and profitability threshold, treatment of disclosed segments, determination and treatment of excluded revenues, calculation of profit before tax, and application of the revenue sourcing rules. As previously noted, the first phase shall be accompanied by a parallel review of the group’s internal control framework by the Expert Advisory Group. After having reached agreement on the first phase, the process would progress to the second phase. In that case, the following elements would be subject to review: identification of countries where the nexus threshold is met, allocation of profit before tax, application of the marketing and distribution safe harbour, application of rules on the impact of withholding taxes, and elimination of double taxation. 
  7. For a tax administration to be on a review panel it is required that it is committed to take an active role on the panel and has sufficient resources to do so. Undoubtedly, the resources required on the tax administrations’ side to fulfill the Tax Certainty Framework will be significant. This holds especially true for the countries with Lead Tax Administrations, i.e., typically countries where the ultimate parent entity of an in-scope MNE group resides. The US comes first to mind having probably the highest number of MNE groups in scope of Amount A. Bearing in mind that the scope thresholds may be lowered after 7 years, which would have the impact of increasing the amount of in-scope companies, the resource issue will become even more prevalent in future years. There is therefore some concern that many of the time periods set out in the Consultation Document may prove to be overly hopeful in practice if ultimately incorporated into the final Pillar One rules.
  8. The Consultation Paper focuses almost exclusively on the process at the level of the tax authorities for the certainty processes. At this point there does not appear to be much in the way of taxpayer involvement and rights in the process e.g. in events of disagreement with outcomes, and what can be expected by taxpayers e.g. confidentiality of information and data. For example, currently a taxpayer’s refusal to implement the review panel’s recommendations is deemed as a withdrawal of his certainty request, with no rights to appeal or have alternative review. An alternative approach could for example have been to escalate such situations to the Determination Panel. 


The OECD will collect public comments on the Tax Certainty Framework for Amount A until 10 June 2022. Comments will be examined at the next meeting of the Task Force on the Digital Economy. Once the consultation has taken place and agreement on the structure and operation of the Tax Certainty Framework has been achieved at the level of the Inclusive Framework, it is expected that model rules will be developed. 

The overall impression when reading the consultation document is that there seem to be numerous open issues for which no consensus has been achieved yet. The timeline for the Two-Pillar-Solution has always been highly ambitious to capture the political momentum. As time progresses, it appears to become more and more clear that the complexity of the subject matters has been underestimated.

The OECD has now published just more than half of the building blocks of Amount A as draft versions. The remaining ones will cover Segmentation, Elimination of Double Taxation, Marketing and Distribution Profits Safe Harbor, Withholding Taxes, Administration, and Unilateral Measures

We will continue to closely monitor and provide client alerts on these future developments around Pillar One.


Richard Fletcher heads the UK Transfer Pricing Group in London. A seasoned professional with over 30 years of experience as an international tax adviser, he has published a number of articles in various tax technical journals. Richard has presented at the International Tax Review’s Global Transfer Pricing Conference for a number of years and at meetings of tax directors of UK multinationals for the UK branch of the International Fiscal Association.


Konstantin Sakuth is a member of the Transfer Pricing team in the Dusseldorf office of Baker McKenzie. Prior to joining Baker McKenzie in February 2021, he worked in the tax practice of a major international law firm for more than three years.

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