On 4 February 2022, the OECD published the draft model rules for two of the building blocks of Amount A under Pillar One, namely Nexus and Revenue Sourcing. This is the first extensive publication on Pillar One since the political agreement on the Two-Pillar Solution in the form of the joint statement from the Inclusive Framework dated 8 October 2021. The draft model rules enable an MNE group in scope of Amount A (i.e., global turnover above EUR 20 billion (or local equivalent) and profitability above 10%, subject to some exceptions; hereafter referred to as a “Covered Group”) to determine its so-called market jurisdictions to which part of the Covered Group’s residual profits will be allocated.

On 8 October 2021, 136 member jurisdictions of the OECD’s Inclusive Framework signed up to a revised Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy. The Statement confirms a number of issues left outstanding from the previous statement on 1 July. Notably, it confirms the amount of residual profits to be redistributed under Pillar One, the rates of tax under the new Global Minimum Tax regime and subject to tax rule, the calculation of the substance based carve out, and the timing of the implementation of the plan. The Inclusive Framework has been able to reach near unanimous political agreement on the broad architecture of the Two-Pillar solution and will now turn to the technical challenges of agreeing the finer details ahead of publication of implementation instruments.