On July 17, 2023 the OECD opened a public consultation regarding Amount B of Pillar One. The consultation period runs until September 1, 2023. Amount B provides for a simplified and streamlined approach to the application of the arm’s length principle to in-country baseline marketing and distribution activities, with a particular focus on the needs of low-capacity countries.

The scope of Amount B is focused on a set of baseline wholesale distributors that can be reliably priced under a one-sided transfer pricing method by applying the pricing framework in Section 4. In-scope distributors, for instance, should not own unique and valuable intangibles nor should they assume certain economically significant risks. The scope of Amount B allows distributors to perform non-distribution transactions when they can be adequately evaluated and reliably priced on a separate basis under the general principles of the OECD TPG. The Amount B scoping framework also permits the undertaking of de minimis retail sales, while excluding the distribution of services and commodities from scope.

To ensure the appropriateness of the scope and pricing framework, further work will be undertaken on the following aspects, where input is requested from stakeholders:

1.     The two alternatives to scope that are presented in this document, which broadly represent the current positions of jurisdictions when considering these issues:

“Alternative A”, which does not require a separate qualitative scoping criterion to identify and exclude non-baseline contributions, and “Alternative B”, which does require a separate qualitative scoping criterion to identify and exclude non-baseline contributions (in scoping criterion 9.a). Text specific to each alternative is included in the document, italicised and in square brackets. Text specific to Alternative A is included in [blue font], whereas text specific to Alternative B is included in [green font]. Moreover, while two alternatives are currently presented with respect to the inclusion of a separate qualitative criterion, this does not preclude the possibility that either alternative might be modified; aspects of the two alternatives might be combined; or that another alternative may ultimately be chosen as the means to determine scope for Amount B, based on stakeholder input and further work to be performed.

2.    The appropriateness of:

a.   the pricing framework, including in light of the final agreement on scope;

b.   the application of the framework to the wholesale distribution of digital goods;

c.   country uplifts within geographic markets; and

d.   the criteria to apply Amount B utilising a local database in certain jurisdictions.

Members of the Inclusive Framework invite input from stakeholders on the elements identified above, including on the relevant aspects of the design of the scope and pricing methodology, through 1st September 2023 with the work on those elements to be completed by year end.

Interested parties are invited to send their comments electronically (in Word format) by email to transferpricing @oecd.org no later than September 1, 2023

Given that open issues remain, the proposals included in this consultation document do not represent the consensus views of the Inclusive Framework, the Committee on Fiscal Affairs or their subsidiary bodies.

The consultation document as released by the OECD on July 17, 2023 can be found here.

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