Since January 1, 2025, multinational companies with distribution operations in Latin America have been grappling with a question that still lacks a uniform answer: Does Amount B apply in the jurisdiction where I operate, or not? The answer depends exclusively on each country, and that fragmentation is currently the main practical risk of this approach.
What is Amount B, in a nutshell
Amount B is the simplified and standardized method that the OECD incorporated as an annex to Chapter IV of its Transfer Pricing Guidelines (final report of February 19, 2024), designed to predictably determine the remuneration for low-risk distribution and marketing activities—what is technically known as “baseline marketing and distribution activities.” Instead of creating a customized benchmark for each routine distributor, the approach applies a matrix of predefined profitability ranges based on asset intensity and operating expenses, plus an adjustment mechanism (“cap and collar”) when operating expenses are disproportionate to the margin.
One point that is often overlooked: what is excluded
Before evaluating whether it is appropriate to apply this approach, there is a key exclusion for the client profile we serve at TPC Group: Amount B does not cover the marketing, trading, or distribution of commodities, nor the distribution of intangible goods or services. For a company that exports minerals, hydrocarbons, or agricultural products—the backbone of much of the region’s economic activity—this simplified approach simply does not apply to that specific operation, even though it may apply to other business lines within the same group (for example, a subsidiary that distributes inputs or finished products not linked to raw materials). Confusing the two regimes is a mistake we have seen repeatedly in the initial assessments of several clients.
The Real Picture of Adoption: Political Commitment Is Not the Same as Domestic Law
This is where the approach becomes more complex than the headline “the OECD launched a simplified method” suggests. There are two distinct layers that should not be conflated:
First layer—the political commitment to mutual recognition. The June 2024 supplementary guidance established a list of “covered jurisdictions”: countries with respect to which the other members of the Inclusive Framework committed to respecting the Amount B result when that country applies it, even if the counterparty has not adopted it. Within that list, a specific subgroup of lower-middle-income countries that are members of the OECD or the G20 voluntarily expressed their willingness to implement the approach: Argentina, Brazil, Costa Rica, Mexico, and South Africa. This is the only list of Latin American countries that we have been able to verify accurately against the official OECD guide.
Second layer—actual domestic legislative adoption. The fact that a country is included in the political commitment does not mean that its tax administration has already incorporated Amount B into its domestic regulations, nor that its application is mandatory for taxpayers. The evidence available to date shows a prevailing pattern of no formal adoption yet, even among countries that expressed political will. Specific cases:
- The United States, while not a lower-middle-income country, did implement Amount B on an optional basis for taxpayers starting in tax year 2025 (U.S. Treasury Notice 2025-04, December 2024).
- Countries such as the Netherlands and Ireland introduced it primarily to honor their commitment to respect the results of developing countries that do apply it, not as a generalized domestic obligation.
- Mexico is among the countries that “are evaluating” its adoption; however, as of the time of this article’s publication, there is no published domestic regulation making it enforceable.
- We have found no evidence that SUNAT has incorporated Amount B into Peruvian Transfer Pricing regulations (Article 32-A of the Income Tax Law and its implementing regulations); nor does Peru appear on the official list of the five lower-middle-income countries that have expressed a willingness to implement it.
What does this mean for a multinational with a distribution network in the region?
In practice, as long as there is no domestic regulation incorporating it, a local distributor remains obligated to justify its remuneration using the traditional comparability analysis under the most appropriate method (usually TNMM), documented in its Local File. Amount B can, at most, serve as a useful comparative benchmark for pre-assessing the level of risk associated with the current pricing policy, but it does not—yet—replace the benchmarking requirement in most Latin American jurisdictions.
The real risk lies with multinational groups with distributors in more than one country in the region: if a subsidiary in a country that has adopted Amount B sets its margin under the simplified matrix, and the counterparty in another jurisdiction has not, an asymmetry may arise that could lead to double taxation if the tax authorities do not coordinate the corresponding adjustment.
Checklist of Recommendations
- Verify whether the specific jurisdiction where the distributor operates has published domestic regulations adopting Amount B, and whether its application is optional or mandatory—it is not sufficient for the country to be listed in the OECD’s political commitment.
- Confirm that the transaction actually qualifies as a “baseline” distribution: Amount B explicitly excludes commodities, intangibles, and services.
- If the group operates distributors in multiple Latin American countries, map on a case-by-case basis which jurisdictions have adopted the approach to anticipate asymmetries among related entities.
- Keep the Local File and traditional comparability analysis up to date as supporting documentation, as long as Amount B is not mandatory in the jurisdiction.
- Monitor periodic updates to the list of covered jurisdictions and qualifying jurisdictions, which the OECD reviews every five years.
At TPC Group, we assist multinational groups with distribution operations in Latin America in determining, jurisdiction by jurisdiction, whether Amount B applies to their structures, and in maintaining supporting documentation in accordance with the arm’s-length standard while domestic adoption of the simplified approach remains uneven across the region.
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