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The OECD/G20 Inclusive Framework on BEPS (IF) released, on 19 February, the report on Amount B of Pillar One, which introduces two options for jurisdictions to elect the simplified and streamlined approach for the transfer pricing of certain baseline wholesale marketing and distribution activities. The report follows the OECD’s July 2023 public consultation on Amount B (July Consultation Document) (See PwC’s Tax Policy Alert for further information). 

The content from the report has been incorporated into the OECD Transfer Pricing Guidelines (TPG). The IF is developing additional guidance on Amount B and has committed to concluding this work by 31 March 2024, with any additions to be incorporated into the TPG at that time. The list of jurisdictions that opt into Amount B within their jurisdictions will be made available on the OECD website. 

This Alert provides a short summary of the report and will be followed by an additional Alert containing more in-depth analysis and observations.  

The takeaway
It will take time to analyse the full implications of this release in light of specific fact patterns and business models. Based on an initial review, the IF has adopted an optional methodology to price certain baseline wholesale marketing and distribution activities that will likely not provide the tax certainty that companies were hoping for. It remains to be seen which countries will adopt Amount B. However, the list of concerns raised by India (in footnotes) may signal a certain level of disagreement still present among IF countries. The design choices made appear to have responded to at least some of the concerns raised during the consultation process. But the approach still falls significantly short of addressing these in a way that can be expected to deliver on Amount B's primary objectives -- administrative simplification and tax certainty. Taxpayers with distributors that may fall within scope of Amount B should start to work through these new rules and model their outcomes so they can be prepared when/if countries adopt these rules.