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.
Stay tuned to Baker McKenzie’s Supply Chains Disrupted video series for discussions and practical insights about current and emerging supply chain issues, with a focus on the tax, legal, trade and regulatory implications supply chain management teams should consider.
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.
Our first episode provides an overview of the series and focuses on the latest triggers for disruption, and the importance of a multidisciplinary approach to supply chain management.
The tax challenges of the digital economy may catch historically non-digital companies by surprise as they “go digital.” Baker McKenzie’s Special Report, Digital Revolution: Transfer Pricing on the Global Tax Battlefield provides insight into digital technology trends non-digital businesses are incorporating and the key tax trends companies must actively navigate including industry sector case studies, transfer pricing considerations, multilateral and unilateral measures, transfer pricing audits and dispute resolution.
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.
Global supply chains across all industry sectors are facing an unprecedented challenge due to the COVID-19 pandemic. Increased pressure on supply chain linkages is nothing new to multinational enterprises (MNEs), due to national tax and trade protectionism measures, evolving international tax policies, and technological disruption, but the current global pandemic…