Submission to OECD on Pillar One – Amount B Public Consultation Document

Abstract

This submission provides various comments and suggestions meant to improve the TNMM mechanism and the present work being conducted in connection with Pillar One Amount B.

The submission explains why the TNMM results in a systemic under-allocation of profit to distributor jurisdictions. This is a particularly important point that needs to be corrected.

The submission also explains why the objective of administrability (simplicity) must trump the objective of reliability (theoretical accuracy).

Regarding the possibility of widening the scope of Amount B, the submission says that the scope should be widened if and only if two conditions are met. These are (i) recognition that theoretical accuracy is meaningless, which means that simplicity can be achieved, and (ii) a solution to the systemic under-allocation of profit issue.

Keywords: BEPS, Amount B, Pillar One, Pillar 1, OECD, Inclusive Framework

JEL Classification: H21, H25, K34, E62