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The three Ps of pillar one

Mark Bevington (ADE Tax) discusses the policy, politics and practicalities of the pillar one proposals. 

As reported in Tax Journal (18 September 2020) leaks of the OECD’s ‘confidential’ proposals of 3 August 2020 to tax administrations have been doing the rounds of MNEs and advisory firms: 225 pages of detailed descriptions and analyses – bridging divergent interests and accommodating commercial complexities.

Eleven building blocks are identified. Six concern the new taxing right (‘amount A’) i.e. how to identify when an MNE should have an amount of residual profit reallocated among market countries; and how that should be identified allocated and relieved. Two concern the fixed return for defined baseline marketing and distribution activities (‘amount B’) i.e. how to increase certainty on returns for ‘routine activities’. A further two relate to procedures to achieve ‘tax certainty’ and the final building block is on implementation and...

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