Simplification coming for the TP

The economic context that surrounds us is continuously influenced and characterized by the continuous and rapid technological process. In fact, today the process of corporate taxation has become extremely more complex and on this point, the OECD has stepped in to which the G20 member countries have given an explicit mandate for the “formulation” of a new taxation model that was cutting-edge and shared in relation to the “digital economy”.


Simplification coming for the TP

On December 8th, 2022, the OECD Secretariat published a consultation document on Amount B of the first pillar (Pillar One Blueprint Report) in relation to the ongoing OECD/G20 project to address the tax challenges arising from the digitalization of the economy (the BEPS 2.0 project).

The project aims to develop a sustainable taxation framework that reflects the current digitalization of the

economy and implements a more correct and efficient allocation of taxing rights.

Amount B aims to:

  • Simplify and rationalize the transfer pricing of standard marketing and distribution activities carried out in the reference jurisdictions, while ensuring results consistent with the principle of free competition.
  • Potentially apply to all multinational enterprises undertaking “routine” distribution activities and, unlike Amount A, is not limited to the world’s largest multinationals.

By delving into the purpose of Amount B, we can identify a dual purpose, namely:

  • Approximating the results that would have been generated by the application of the Arm’s-length principle through the method of “transnational net margin” TNMM, calculated on a net income basis of sales in accordance with the OECD transfer pricing guidelines (last updated version in 2022);
  • Improving “tax certainty” and reducing disputes between the tax authorities of different countries and taxpayers, thus simplifying the administration of transfer pricing rules and, consequently, reducing compliance costs.

The intercompany transactions to which Amount B would apply should be carefully delineated through the five comparability factors indicated in Chapter I of the OECD Transfer Pricing Guidelines.

According to the consultation document, the definition of basic marketing and distribution activities will be obtained by referring to a positive and negative list of qualitative factors that are closely related to the performance of marketing and distribution activities, with further reference to a series of quantitative indicators.

The applicability could also extend to “multifunctional” companies, i.e., those that carry out “also” additional functions (such as research and development) or activities within the multinational group. In this case, Amount B would still be applied to such multifunctional distribution entities through income statement segmentation.

The pricing methodology in the development phase, using a broad centralized approach to transnational net margin (‘TNMM’), aims to eliminate the need for companies to undertake their own benchmarking exercises in relation to their distributors within the scope of application. Therefore, companies will focus on:

  • Assessing whether distributors meet the established criteria for applying Amount B;
  • Making any necessary adjustments or calculations based on financial results to determine prices, and
  • Documenting the results in transfer pricing documents.

The purpose of Amount B is to provide a standardized pricing methodology for specific transactions in line with the established principle of free competition. Therefore, the OECD does not see the need to amend any double taxation convention for Amount B to enter into force.

The intention of the OECD is to use the Transfer Pricing Guidelines as a framework for implementing Amount B. However, it has not yet been decided in what form it should be incorporated into the Guidelines: it could be conceived as a safe-harbor rule or as a best practice recommendation.

The OECD expects that Amount B will come into force at the beginning of 2024 (to align it with other aspects of the first pillar such as Amount A, as well as the removal of digital services taxes and other unilateral measures). This means that the completion of technical work on Amount B will need to take place by mid-2023.Inizio modulo


LDP provides Tax, Law and payroll  scalable and customised services and solutions. LDP Professional have also matured a significant expertise in  M&A, Corporate Finance, Transfer Price, Global Mobility Consultancy and Process Automation. 

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