The Organisation for Economic Cooperation and Development (OECD) has published a comprehensive report on Amount B on 24 February 2025.

As part of the Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy agreed by the OECD/G20 Inclusive Framework on BEPS in October 2021, Amount B provides for a simplified and streamlined approach to the application of the arm’s length principle to in-country baseline marketing and distribution activities, with a particular focus on the needs of low-capacity countries. This consolidated report incorporates the agreed materials on Amount B that have been released by the Inclusive Framework since February 2024 up until December 2024.

In October 2021, the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (Inclusive Framework) agreed to simplify and streamline the application of the arm’s length principle to in-country baseline marketing and distribution activities, with a particular focus on the needs of low-capacity jurisdictions.

Following that mandate, this report contains the guidance on “Special considerations for baseline distribution activities” which is incorporated into the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2022 as an Annex to Chapter IV. The simplified and streamlined approach set out in that guidance is expected to enhance tax certainty and to relieve compliance burdens for taxpayers and tax administrations alike, particularly those in low-capacity jurisdictions facing limited resources.

Jurisdictions can choose to apply the simplified and streamlined approach to qualifying transactions of eligible baseline distributors. The guidance in this report sets out the characteristics of in-scope distributors, which cannot, for example, assume certain economically significant risks or own unique and value intangibles. Moreover, certain activities may exclude a distributor from the scope, such as the distribution of commodities or digital goods. The simplified and streamlined approach provides a pricing framework whereby a 3-step process determines a return on sales for in-scope distributors.

Finally, the report also provides guidance on documentation, transitional issues, and tax certainty considerations.

Earlier, The OECD hosted a webinar on Pillar One Amount B on 11 February 2025, where the transfer pricing team shared updates on the Amount B framework. Developed by the Inclusive Framework on BEPS, this framework simplifies the application of the arm’s length principle to baseline marketing and distribution activities.