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International: Amount B back in the spotlight as OECD opens consultation on Pillar One’s Amount B

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In brief

Amount B was introduced as a “fixed return” on “baseline marketing and distribution activities” in the October 2020 Blueprint of Pillar One, and was seen as a critical component of the Pillar One deal. Nevertheless, over the past two years, in respect of Pillar One developments, the focus of the OECD Inclusive Framework members has been primarily on Amount A.

However, on 8 December 2022, the OECD finally released the long-awaited consultation document and hosted a webinar on the proposed design of Amount B, putting Amount B back into the international tax spotlight. The OECD has now requested input from stakeholders on the technical design of Amount B, with comments to be received no later than 25 January 2023.

In more detail

On 8 December 2022, the OECD published a public consultation document on Amount B. It outlines the main design elements of Amount B, consisting of, inter alia, the transactions in scope of Amount B and the proposed pricing methodology to determine an appropriate remuneration for the in-scope activities.

Since the publication of the Pillar One Blueprint in October 2020, Amount B has been living in the shadow of Amount A, leading to a great deal of uncertainty about its future amongst the international tax community. The OECD has, up until now, appeared to prioritize the progress of Amount A, placing Amount B in the background. The main points to take away from the original Blueprint were the two components of Amount B, namely:

  1. The scope of “baseline marketing and distribution activities” will be eligible for Amount B.
  2. A proposed remuneration mechanism for the aforementioned in-scope activities.

With no official developments regarding Amount B since the release of the Blueprint, the launch of the consultation document on 8 December 2022 has been long overdue.

Click here to access the full alert.

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Author

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.

Author

Vladimir Zivkovic is a Counsel in Baker McKenzie Amsterdam’s Transfer Pricing team. He has 10+ years of experience in transfer pricing and value chain analysis. Vladimir started his career in Canada in 2008 and relocated to the Netherlands in 2011.

Author

Alejandro Zavalais is a Legal Director in Baker McKenzie’s Amsterdam office. Prior to joining the European transfer pricing team in 2015, he was part of the Firm's Mexican transfer pricing and valuation group, working for five years with multinational companies operating in Latin American countries and the US.

Author

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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