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Richard Fletcher

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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.

After several public consultations on individual elements of Amount A, the OECD has now released a consolidated version of the draft operative provisions on Amount A in its Progress Report dated 11 July 2022. The new publication includes model rules for three building blocks of Amount A that had not previously been dealt with, namely: Segmentation, Marketing and Distribution Profits Safe Harbor, and Elimination of Double Taxation. The OECD welcomes comments from the public no later than 19 August 2022.

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.

On 6 May 2022, the OECD released a public consultation document with respect to the Regulated Financial Services Exclusion for Amount A. This latest consultation document follows four other publications on aspects of Amount A since February relating to nexus and revenue sourcing, tax base determinations, scope, and the extractives exclusion. As with earlier draft model rules, this publication is a work-in-progress and subject to changes. The OECD welcomes comments from the public before 20 May 2022, following which a more detailed commentary on a number of technical items is expected to be released.

On 4 April 2022, the OECD released a new public consultation document with respect to the draft model rules for Amount A. This latest draft model rules cover the Scope building block which stipulates which MNE Groups will be covered by the Amount A model rules. This document is the fourth building block of Amount A to be released. On 4 February 2022, the OECD issued its first extensive publication on Amount A covering the two components Nexus and Revenue Sourcing.

On 14 March 2022, the OECD published its long awaited commentary to the model GloBE rules. At more than 200 pages, the commentary will take some time to fully absorb. However, it appears that the guidance still leaves some fundamental issues unanswered, such as how the GloBE rules co-exist with the US’s GILTI regime, and what simplifications/safe-harbors will be available to taxpayers to reduce their compliance burden. It is expected that this will be further addressed in the implementation framework, for which a public consultation was launched on the same day.

On 18 February 2022, the OECD released a new public consultation document with respect to the draft model rules for Amount A. This time, the draft model rules cover the Tax Base Determinations building block which deals with enabling an MNE group in scope of Amount A to determine the taxable profit which will be partially reallocated to so-called market jurisdictions. This document comes only two weeks after the OECD issued its first extensive publication on Amount A covering the two components Nexus and Revenue Sourcing. It should be noted that the latest draft model rules are a work-in-progress and subject to changes. The OECD welcomes comments from the public before 4 March 2022, following which more detailed commentary on a number of technical items is expected to be released.

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 14 and 15 January 2021, the OECD held a public consultation to address comments received from the public on the Draft Pillar 1 and Pillar 2 Blueprints (available here). The first day of the two-day consultation, which was held via video conference, addressed feedback received from stakeholders (businesses, trade associations, academia and NGOs) in December of 2020 on the Pillar 1 Blueprint. The OECD also provided an update on the state of play, with confirmation that the Inclusive Framework goal remains to reach a consensus political agreement by July of 2021. While the participants echoed the broad support among businesses and organizations for an international consensus-based solution, it is clear following the January 14 consultation that substantial work lies ahead before a Pillar 1 agreement is reached, and thereafter further work to draft the necessary multinational agreements and obtain national agreement before it can be successfully implemented across a meaningful number of jurisdictions. Below, we examine the key take-aways from the consultation on Pillar 1.

The impact of COVID-19 has been profound. Companies are facing disruptions to supply chains, customer demand, operations and output, and are being confronted with liquidity concerns. In many cases, governments across the world have announced tax provisions and other programs to dampen economic hardships and free much needed cash resources.…