OECD Issues Final Rules for Amount B Under Pillar One

On February 19, 2024, the OECD published its final report on Pillar One Amount B, aimed at simplifying and streamlining the application of the arm’s length principle to baseline marketing and distribution activities. It includes 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 report/updated guidance provides that jurisdictions can choose to apply a ‘simplified and streamlined approach’ (formerly referred to as Amount B) to in scope distributors resident in their jurisdiction.

The report focuses on:

• The determination of in-scope distributors, as well as which distributors are excluded;
• The determination of the most appropriate pricing method;
• The method used to determine the approximate arm’s length result; and
• Documentation requirements.