Microsoft Distribution Affiliate’s Margin and Pillar 1 Amount B

While the implications of Amount B for the margins of Microsoft’s distribution affiliates are roughly similar to what would be expected under the arm’s length standard, the position of various tax authorities would imply higher profit margins for their local distribution affiliate.

OECD Public Consultation Document: Pillar One — Amount B may need to be amended because the document envisions challenges to intercompany pricing with respect to distribution affiliates but assumes that they do not own marketing intangibles (See OECD Public Consultation Document: Pillar One — Amount B (17 July 2023 – 1 Sept. 2023) (July 17, 2023)). Microsoft’s ...