Published on 19 February 2024, the report provides an elective framework for a simplified and streamlined approach for applying the arm’s length principle to in-country baseline marketing and distribution activities, including guidance on the circumstances under which a tested party would be eligible for applying the approach and how to price in-scope transactions. Jurisdictions can choose to apply the simplified and streamlined approach for in-scope transactions of tested parties in their jurisdictions for fiscal years commencing on or after 1 January 2025.

The Reader's Guide provides readers with additional context and guidance on how to engage with the report effectively.

Statement on the definitions of qualifying jurisdiction within the meaning of section 5.2 and section 5.3 of the simplified and streamlined approach

The statement provides the definition of qualifying jurisdictions within the meaning of section 5.2 (Operating expense cross-check) and section 5.3 (Data availability mechanisms). Under section 5.2, a tested party located in qualifying jurisdictions within the meaning of that section is subject to alternative cap rates. Under section 5.3, a tested party located in qualifying jurisdictions within the meaning of that section is eligible for an adjustment under that section.

These definitions will facilitate adjustments to the return calculated under the simplified and streamlined approach for tested parties located in those qualifying jurisdictions. The respective definitions are now incorporated into the OECD Transfer Pricing Guidelines. 

Statement on the definition of covered jurisdiction for the Inclusive Framework political commitment on Amount B

The political commitment on the simplified and streamlined approach recognises that, subject to their domestic legislation and administrative practices, members of the Inclusive Framework commit to respect the outcome determined under the simplified and streamlined approach to in-scope transactions where such an approach is applied by a covered jurisdiction and to take all reasonable steps to relieve potential double taxation that may arise from the application of the simplified and streamlined approach by a covered jurisdiction where there is a bilateral tax treaty in effect between the relevant jurisdictions.

The MCAA is designed to facilitate the implementation of the political commitment on the simplified and streamlined approach, and provides model provisions to respect the application of the simplified and streamlined approach by a covered jurisdiction. Jurisdictions can choose to use MCAA to implement the political commitment where there is a tax treaty in place.

The Pricing Automation Tool is designed to automatically compute the Amount B return for an in-scope tested party, requiring only minimal data inputs. It is intended to further optimise the administrative and simplification benefits of Amount B for both tax administrations and taxpayers.  The tool will be updated annually to reflect any changes to the pricing matrix and other datapoints relevant to application of Amount B adjustment features.

The fact sheets provide a high-level overview of the Amount B mechanics, including the steps that taxpayers and tax administrations should take to apply Amount B.