The Organisation for Economic Co-operation and Development (OECD) announced the release of a Model Competent Authority Agreement (MCAA) concerning Amount B of Pillar One, a part of the OECD/G20 Inclusive Framework on BEPS yesterday, 26 September 2024.
Amount B streamlines and simplifies the application of the arm’s length principle for pricing baseline marketing and distribution activities. This tool is designed to be particularly beneficial for jurisdictions with limited resources and data availability.
At the beginning of this year, the Inclusive Framework released a report on Amount B of Pillar One. This report provides a simplified and streamlined pricing framework for baseline marketing and distribution activities that is expected to reduce transfer pricing disputes, compliance costs, and enhance tax certainty for tax administrations and taxpayers alike.
The implementation of Amount B is supported by the political commitment from all Inclusive Framework members to take all reasonable steps to relieve potential double taxation that may arise from the application of the simplified and streamlined approach by a covered jurisdiction where there is a bilateral tax treaty in effect.
Additional guidance on Amount B – including the definition of covered jurisdiction for the Inclusive Framework political commitment on Amount B – was published in June 2024, allowing jurisdictions to begin with implementation.
Further work on the Pillar One package, including the Amount B framework, is ongoing as indicated in the Statement by the Co-Chairs of the Inclusive Framework on 30 May 2024.
