Over the last few months there have already been a number of legislative developments in connection with the global minimum tax under Pillar 2 all around the world. It is fair to say that Pillar 2 is increasingly gaining momentum and a critical mass of implementing jurisdictions could be reached in the foreseeable future. Germany is now the next country taking actions to implement Pillar 2 into domestic law. On 21 February 2023, the German Federal Ministry of Finance has published a draft law including explanatory comments.

Amount B was introduced as a “fixed return” on “baseline marketing and distribution activities” in the October 2020 Blueprint of Pillar One, and was seen as a critical component of the Pillar One deal. Nevertheless, over the past two years, in respect of Pillar One developments, the focus of the OECD Inclusive Framework members has been primarily on Amount A. However, on 8 December 2022, the OECD finally released the long-awaited consultation document and hosted a webinar on the proposed design of Amount B, putting Amount B back into the international tax spotlight. The OECD has now requested input from stakeholders on the technical design of Amount B, with comments to be received no later than 25 January 2023.

After several public consultations on individual elements of Amount A, the OECD has now released a consolidated version of the draft operative provisions on Amount A in its Progress Report dated 11 July 2022. The new publication includes model rules for three building blocks of Amount A that had not previously been dealt with, namely: Segmentation, Marketing and Distribution Profits Safe Harbor, and Elimination of Double Taxation. The OECD welcomes comments from the public no later than 19 August 2022.

On 27 May 2022, the OECD released a new public consultation document presenting A Tax Certainty Framework for Amount A which will be the subject of this alert. Concurrently, a separate public consultation document dealing with Tax Certainty for issues related to Amount A was published, which is the focus of another alert. With these two new documents, the OECD has now released 7 out of 13 building blocks forming Amount A under Pillar One.

On 4 April 2022, the OECD released a new public consultation document with respect to the draft model rules for Amount A. This latest draft model rules cover the Scope building block which stipulates which MNE Groups will be covered by the Amount A model rules. This document is the fourth building block of Amount A to be released. On 4 February 2022, the OECD issued its first extensive publication on Amount A covering the two components Nexus and Revenue Sourcing.

On 18 February 2022, the OECD released a new public consultation document with respect to the draft model rules for Amount A. This time, the draft model rules cover the Tax Base Determinations building block which deals with enabling an MNE group in scope of Amount A to determine the taxable profit which will be partially reallocated to so-called market jurisdictions. This document comes only two weeks after the OECD issued its first extensive publication on Amount A covering the two components Nexus and Revenue Sourcing. It should be noted that the latest draft model rules are a work-in-progress and subject to changes. The OECD welcomes comments from the public before 4 March 2022, following which more detailed commentary on a number of technical items is expected to be released.