OECD: Tax certainty aspects of Amount A under Pillar One; public consultation

The OECD is seeking public comments on two consultation documents relating to tax certainty aspects of Amount A under Pillar One

The OECD is seeking public comments on two consultation documents

The Organisation for Economic Cooperation and Development (OECD) today issued a release seeking public comments on two consultation documents relating to tax certainty aspects of Amount A under Pillar One: Tax Certainty Framework for Amount A [PDF 808 KB] and Tax Certainty for Issues Related to Amount A [PDF 1.9 MB]—part of the ongoing work of the OECD/G20 Inclusive Framework on base erosion and profit shifting (BEPS) in implementing the two-pillar solution to address the tax challenges arising from the digitalisation of the economy.

As explained by today’s OECD release, a central element of Amount A is an innovative tax certainty framework that guarantees certainty for in-scope groups over all aspects of the new rules, including the elimination of double taxation. This would eliminate the risk of uncoordinated compliance activity in potentially every jurisdiction where a group has revenues, as well as a complex and time-consuming process to eliminate the resulting double taxation. The tax certainty framework incorporates a number of elements designed to address different potential risks posed by the new rules:

  • A scope certainty review, to provide an out-of-scope group with certainty that it is not in-scope of rules for Amount A for a period, removing the risk of unilateral compliance actions
  • An advance certainty review, to provide certainty over a group’s methodology for applying specific aspects of the new rules that are specific to Amount A, which will apply for a number of future periods
  • A comprehensive certainty review to provide an in-scope group with binding multilateral certainty over its application of all aspects of the new rules for a period that has ended, building on the outcomes of any advance certainty applicable for the period

Furthermore, a tax certainty process for issues related to Amount A would provide that in-scope groups will benefit from dispute prevention and resolution mechanisms to avoid double taxation due to issues related to Amount A (e.g., transfer pricing and business profits disputes), in a mandatory and binding manner. An elective binding dispute resolution mechanism would be available only for issues related to Amount A for developing economies that are eligible for deferral of their BEPS Action 14 peer review and have no or low levels of mutual agreement procedure disputes. 

The OECD/G20 Inclusive Framework on BEPS agreed to release the public consultation documents in order to solicit public comments, but as noted in today’s release, “… it does not reflect consensus regarding the substance of the documents.” According to the OECD, the comments received will assist members of the Inclusive Framework in further refining and finalizing the relevant rules.

Comments are requested by 10 June 2022, and should be submitted separately for each consultation document.

 

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.