OECD issues public consultation on Amount B of Pillar One
Following the consultation document issued in December 2022, the OECD / G20 InclusiveFramework (IF) issued public consultation document on AmountB -PillarOne on 17 July 2023.
The document provides scoping framework for baseline distribution activities i.e., qualifying transactions and scoping criteria, as well as simplified and streamlined pricing approach (‘approach’).
No monetary thresholds have been prescribed for applicability of Amount B and hence can be applicable for all MNEs, as against Amount A of Pillar One and Pillar Two. Clarity is awaited on whether Amount B will be a SafeHarbour or will be prescribed.
VSTN’s alert summarises the key aspects of Amount B including the qualifying transactions, scoping criteria – In-scope and Out-scope, pricing approach and adjustments for geographic differences and other aspects such as documentation, transition issues and tax certainty.
A one-pager process flow chart presented diagrammatically, is appended to the Alert for quick overview of the Amount B.
All business keeping the above aspects in mind may need to evaluate the functional activities of their distribution entities as to whether they would fall under qualifying transactions, in scope , whether there is a business need to realign transactions, financial impact with/ without Amount B and documentation of various parameters which are required and ensure alignment of three tier documentation – local file, master file and Country-by-country reporting.