On 30 January 2023 the OECD published the comments received on the design elements of Amount B under Pillar One relating to the simplification of transfer pricing rules. Comments were received from more than sixty businesses, institutes, NGOs and public sector bodies.

The South Centre, an intergovernmental organization of developing countries with 55 member states, considered that low-capacity jurisdictions should be defined more clearly. This could refer to jurisdictions lacking administrative capacity or to jurisdictions where there are insufficient local comparables. The main issue for introducing Amount B was the problem arising from lack of local comparables and this could be the basis of the definition. As Amount B was primarily intended to address the lack of comparables, it should be used only when local comparables are unavailable. Also, if local comparables are unavailable, other similar markets could be used as a source of suitable comparables.

The South Centre also noted that some member countries of the Inclusive Framework do not follow the OECD transfer pricing guidelines and rely more on other approaches, including the UN Practical Manual on Transfer Pricing. Amount B should therefore also be brought into line with the UN Manual.

The BEPS Monitoring Group, a network of tax experts from civil society organizations researching and campaigning for tax justice, noted that in their opinion the approach suggested in the consultation document would be ineffective. Profits of an MNE profits arise from a range of activities such as product development, inventory and quality controls, logistics, advertising, sales, marketing and customer support, and the attribution of these functions to different entities within the group is inevitably fictitious. Limiting Amount B to what are seen to be baseline stripped-risk functions would result in under-allocation of profit to the sales jurisdictions. Simplification would be more effective if based on a formulaic allocation from the total global profits of the MNE. Multinational corporate groups therefore needed to be treated in line with the economic reality that they operate as unitary entities, and simple formulaic methods should be applied to allocate their global profits in line with their real presence and activities in each jurisdiction.

The Digital Economy Group (DEG), an informal coalition of US and European companies providing digital goods and services, considered that the scope of Amount B should cover a wider range of routine distribution activity. Transfer pricing analysis can allow for functional differences among distribution entities. The transactional net margin method allows prices to be set based on a comparability analysis even when the market comparables and tested parties do not have exactly the same functional profile. The DEG considered that the scope should include all distribution activity which can reasonably be classified as routine, as the exclusion of retail distributors and distributors of software and services would greatly reduce the usefulness of Amount B to taxpayers and to tax administrations.

The DEG also noted that the documentation requirements would be a burden for taxpayers and reduce the administrative benefits.

The Irish Tax Institute considered that the application of Amount B would operate most effectively as a safe harbour which taxpayers could elect to adopt, similar to the elective simplified approach for low value-adding intra-group services. This would increase certainty for taxpayers while providing simplification for low-capacity jurisdictions. It would also permit MNE groups to apply Amount B to a transaction but apply a more appropriate pricing method if available.

The Institute considered that the extensive qualitative scoping assessment that taxpayers would need to complete to confirm if their activities are in scope of Amount B, and the onerous documentation requirements, would not provide simplification for taxpayers. Businesses would need to undertake a detailed qualitative analysis to assess whether their activities are within the scope of Amount B. Owing to the number of exclusions from the scope of Amount B, the Institute considered that scope of activities and industries to which Amount B applied would be extremely narrow. They suggested that to improve tax certainty for businesses a mechanism could be developed for an MNE to obtain advance assurance on whether a transaction is within the scope of Amount B.

The Business Roundtable, representing more than 230 CEOs of leading US companies, considered that Amount B should be broader in scope (including retail, digital, cloud and other services, and entities performing more than just baseline marketing and distribution activities); and apply to all covered groups that are subject to the Amount A rules. There should not be onerous documentation requirements such as some of those proposed in the consultation document.