The OECD has published responses received to its consultation on the ‘design elements’ of Amount B under Pillar One which aims to simplify and streamline the transfer pricing of baseline marketing and distribution activities in line with the arm’s length principle.
In its response to the consultation, the CIOT raises concerns around potential upheaval to the international tax system without achieving the policy objectives around reallocation, instead ‘resulting in double taxation and a compliance burden similar to (or worse than) that which exists as a result of the unilateral measures’.
The CIOT highlights the extra compliance burdens both for MNEs and tax authorities, coinciding with recovery from the Covid pandemic and other resource-intensive developments, such as getting to grips with transactions in cryptoassets. As the CIOT notes: ‘It is not practical to continue to place increased administrative burdens on tax authorities when many are already struggling to maintain service levels as a result of administering their own jurisdictions’ tax rules.’
The CIOT suggests that further work on Amount B should focus on ‘meaningful simplification’ to ensure the rules achieve the streamlining and potential benefits both for MNEs and tax administrations as originally intended.
The OECD has published responses received to its consultation on the ‘design elements’ of Amount B under Pillar One which aims to simplify and streamline the transfer pricing of baseline marketing and distribution activities in line with the arm’s length principle.
In its response to the consultation, the CIOT raises concerns around potential upheaval to the international tax system without achieving the policy objectives around reallocation, instead ‘resulting in double taxation and a compliance burden similar to (or worse than) that which exists as a result of the unilateral measures’.
The CIOT highlights the extra compliance burdens both for MNEs and tax authorities, coinciding with recovery from the Covid pandemic and other resource-intensive developments, such as getting to grips with transactions in cryptoassets. As the CIOT notes: ‘It is not practical to continue to place increased administrative burdens on tax authorities when many are already struggling to maintain service levels as a result of administering their own jurisdictions’ tax rules.’
The CIOT suggests that further work on Amount B should focus on ‘meaningful simplification’ to ensure the rules achieve the streamlining and potential benefits both for MNEs and tax administrations as originally intended.
