Amount B Pillar I – Tax Challenges of Digitalization

February 26, 2024


On October 8, 2021, the “Statement on the two-pillar approach to address tax challenges arising from the digitalization of the economy” was published, outlining the components of each pillar based on the approach agreed upon by the Inclusive Framework on Base Erosion and Profit Shifting of the OECD and the G20 (Inclusive Framework on BEPS of the OECD/G20). In this context, one of the components of Pillar 1, called “Amount B,” aims to simplify and streamline the application of the Arm’s Length Principle on core marketing and distribution activities, focusing on the needs of Low-Capacity Jurisdictions, which was developed by the “Working Group No. 6 on the Taxation of Multinational Enterprises” and the “Forum on Mutual Agreement Procedures of the Tax Administration Forum,” both of the OECD.


On February 19, 2024, the Inclusive Framework on BEPS of the OECD/G20 published the report on Amount B of Pillar One. As indicated above, its main objective is the simplification and streamlining of the application of the Arm’s Length Principle in marketing and distribution activities. The content of this report has been integrated into the OECD Transfer Pricing Guidelines.

Several developing countries have reported that between 30% and 70% of their Transfer Pricing discussions are related to core marketing and distribution activities. The agreed changes to the OECD Transfer Pricing Guidelines will enable jurisdictions to apply clear, simple rules to these activities to secure revenue and preserve valuable tax administration resources, in addition to providing additional certainty to multinational companies.


Amount B establishes a simplified framework to determine a return on sales for eligible distributors based on the existing principles in the OECD Transfer Pricing Guidelines. This measure will reduce Transfer Pricing controversies and compliance costs and improve tax certainty for tax administrations and taxpayers, particularly in resource- and information-limited jurisdictions.

The report also presents two implementation options for jurisdictions interested in the simplified approach from January 2025. It describes the circumstances in which a distributor, or even producers, falls within the scope of Amount B, as well as the activities, such as the distribution of commodities or digital goods, excluded from this approach.

These efforts are aligned with the Results Statement of July 2023 on the Two-Pillar Solution to Address Tax Challenges Arising from the Digitalization of the Economy. In addition, the Commentary on Article 25 of the OECD Model Convention on Taxation of Income and Net Worth has been made conforming changes aimed at improving consistency in dispute resolution procedures across jurisdictions. These changes have been approved by the Inclusive Framework and will be filed to the OECD Council for approval.