Jurisdiction(s):
United Kingdom

OECD Pillar One: Amount A profit reallocation and Amount B transfer pricing—scope, nexus, allocation, MLC implementation, tax certainty and Digital Services Tax withdrawal

Published by a LexisNexis Tax expert

Practice notes

In October 2021, countries participating in the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) (the OECD Inclusive Framework) endorsed a ‘two-pillar’ package addressing the tax issues stemming from the digitalisation of the global economy. The two pillars constitute an ambitious effort to reform and modernise international tax rules that allocate where, and how, profits are taxed. Pillar One is chiefly (though not exclusively) aimed at the digital economy: ‘a world where enterprises can effectively be heavily involved in the economic life of different jurisdictions without any significant physical presence and where new and often intangible value drivers increasingly come to the fore’.

Pillar One introduces two elements:

a new taxing right that stretches beyond traditional tax nexus rules anchored in physical location (Amount A)
a standardised methodology for transfer pricing baseline marketing and distribution activities between related parties (Amount B).

This Practice Note provides a high-level summary of:

the tax challenges addressed by Pillar One
the underlying concepts and principles of Pillar One
the key features of Amount A
how Amount A will be implemented, and
the principles of Pillar One and Amount A and Amount B within this Practice Note...

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Web page updated on 21/05/2026

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