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Accounting

AICPA Comments to Treasury on Amount B of OECD Pillar One

These comments, which are focused on Amount B of OECD Pillar One, complement Association’s prior comments on OECD documents.

Isaac M. O'Bannon

Dec. 13, 2023

The American Institute of CPAs (AICPA) and the Chartered Institute of Management Accountants (CIMA) together as the Association of International Certified Professional Accountants (the Association) submitted comments to the US Department of the Treasury this week in response to a request for comments on the draft Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework Multilateral Convention to Implement Amount A of Pillar One (Pillar One MLC) and accompanying documents, citing concerns that the December 31, 2023 target date for resolution seems unlikely to be reached.

These comments, which are focused on Amount B of OECD Pillar One, complement Association’s prior comments on OECD documents. The comments address the following areas:

  • Pillar One, Amount B;
  • Scope of Transactions;
  • Most Appropriate Method;
  • Pricing Matrix;
  • Dispute Resolution; and
  • Remaining Issues.

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The Association cites that further work will need to be undertaken on the following aspects of Amount B to achieve consensus on the scope and pricing framework, including:

  1. Achieving an appropriate balance between a quantitative and qualitative approach in identifying baseline distribution activities.
  2. Confirming the appropriateness of:
    1. The pricing matrix;
    1. Application of the framework to the wholesale distribution of digital goods;
    1. Country uplifts within geographic markets; and
    1. How to apply Amount B utilizing a local database in certain jurisdictions.

“The implementation of Amount B promises to streamline and simplify a fundamental transfer pricing issue, providing substantial benefits to taxpayers and governments,” says the letter. “However, in light of substantial unresolved issues regarding the scope of transactions and a lack of transparency regarding the pricing matrix, the December 31, 2023, target date for resolution seems unlikely to be reached.”

Concerns remain that the OECD will reach agreement on Amount B, but some taxing jurisdictions will not apply it or will apply it inconsistently. The letter notes that whether or not the December 31st target date is satisfied, the streamlining and simplification goals of amount B are worthy of the efforts and compromise needed to achieve a global consensus.

About AICPA & CIMA, together as the Association of International Certified Professional Accountants 

AICPA® & CIMA®, together as the Association of International Certified Professional Accountants (the Association), advance the global accounting and finance profession through our work on behalf of 698,000 AICPA and CIMA members, candidates and engaged professionals in 188 countries and territories. Together, we are the worldwide leader on public and management accounting issues through advocacy, support for the CPA license, the CGMA designation and specialized credentials, professional education and thought leadership. We build trust by empowering our members and engaged professionals with the knowledge and opportunities to be leaders in broadening prosperity for a more inclusive, sustainable and resilient future.