Preliminary Analysis of KPMG Transfer Pricing Study for OECD Digital Tax Proposal

13 Pages Posted:

Date Written: March 8, 2020


A recent KPMG transfer pricing study posits fixed percentages for returns to marketing and distribution activities, a.k.a. Amounts B and C in OECD parlance. The study casts some light on the OECD's design for a new global tax allocation respecting the profits of certain digital economy firms. By extrapolating from Amounts B and C, the KPMG study helps draw a very rough estimate of what Amount A potentially looks like (granularity is impossible because, among other things, how much routine and non routine profit is attributable to factors other than Amounts A, B, and C cannot be determined in the abstract). The attached powerpoint provides a formula I derived from the OECD Unified Approach, applying the fixed routine (10% and 20%) and market share (20%) numbers the OECD provided by way of example in its Impact Analysis, and plugging in the KPMG percentages for Amounts B and C. The study provides a starting point to consider how firms are likely to approach Pillar One and how nations are likely to fare under the OECD Secretariat's approach, now endorsed by the Inclusive Framework.

Keywords: digital economy, taxation, tax policy, OECD, Pillar one

JEL Classification: D21, D78, E62, F02, F21, F23, F42, H25, H87, K34, O16, O23, O38

Suggested Citation

Christians, Allison, Preliminary Analysis of KPMG Transfer Pricing Study for OECD Digital Tax Proposal (March 8, 2020). Available at SSRN:

Allison Christians (Contact Author)

McGill University - Faculty of Law ( email )

3644 Rue Peel
Montréal, Quebec

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