Establishing a streamlined transfer pricing approach for baseline distribution — originally seen as the least controversial aspect of the OECD-brokered two-pillar global tax reform — has hit a roadblock that will be difficult to resolve.
First proposed in a 2019 OECD consultation document, a project awkwardly dubbed amount B was announced as a kind of enticement to multinationals wary of the more radical reallocation of taxing rights under amount A. Amount B was meant to simplify pricing of “baseline” wholesale distribution activities carried out by multinational groups, which have historically led to more disputes than the monetary stakes typically justify. As the 2019 consultation document put it, “appropriate and negotiated fixed returns could provide certainty to both taxpayers and tax administrations, and reduce the dissatisfaction with the current transfer pricing rules.”
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