Amount B Entity Segmentation Presents Opportunities and Traps

Amount B of the Pillar One proposal is intended to provide a “fixed return” for “baseline marketing and distribution activities,” while Amount A is a residual amount to be split among market jurisdictions. The OECD Inclusive Framework (OECD IF) released additional guidance on the scope and calculation of Amount B on February 19 and June 17, 2024. However, despite the veneer of trying to provide taxpayers and tax authorities with a “simplified and streamlined approach” to pricing marketing and distribution activities, the guidance contains a major area of potential dispute.

This article assumes that a taxpayer has met the ...