For more information on Pillar One we refer to our tax flashes of 13 October 20202 July 2021 and 11 October 2021.


Pillar One is meant to address tax challenges that arise from the digitalization of the economy. Amount A (deemed “residual profit”) provides a new taxing right over a portion of the profits that large and highly profitable enterprises realize in market jurisdictions where they supply goods or services, or where consumers or users are located. The Model Rules for a Tax Certainty Framework for Amount A of Pillar One contain a template that can be implemented in domestic law, which aims to guarantee certainty for in-scope groups over all aspects of the Pillar One Rules, including double taxation relief.

We refer to our publications of 7 February 2022, 24 February 2022 and 20 April 2022 for the other published building blocks on Pillar One Draft Model Rules for nexus, revenue sourcing rules, the framework for tax base determination rules, scope and the Extractives and Regulated Financial Services Exclusions.

A Tax Certainty Framework for Amount A of Pillar One

The OECD has introduced a Tax Certainty Framework for Amount A, which aims to guarantee certainty for in-scope groups over all aspects of the Pillar One Rules, including double taxation relief. The Tax Certainty Framework eliminates the risk of uncoordinated compliance activity in potentially every jurisdiction where a group is active and aims to avoid a complex and time-consuming process to eliminate the resulting double taxation through Mutual Agreement Procedures. Essentially, the Tax Certainty Framework is aimed at preventing tax disputes from arising.

The Tax Certainty Framework aims to address different potential risks posed by the new rules:

  • A Scope Certainty Review. This provides an out-of-scope Group with certainty that it is not in-scope for Amount A in a Period, with the aim of reducing the risk of unilateral compliance actions by jurisdictions that believe the Group may be in-scope. Accordingly, A Scope Review Panel of tax administrations, coordinated by the Lead Tax Administration, can determine whether a Group is required to apply particular Amount A rules, such as those on excluded revenues or segmentation.
  • An Advance Certainty Review. This provides certainty over a Group’s methodology for applying specific aspects of the new rules that are specific to Amount A, which will apply for three years for the first Advance Certainty Outcome, which can be extended to five years for subsequent requests. The Review would be available for a Group’s methodology for revenue sourcing, including categorization of revenues, choice of reliable method, and the internal control framework. Advance Certainty would also be available for a Group’s segmentation methodology for the purposes of rules on Amount A insofar this is relevant to the calculation of before-tax profits. The Group’s first request for Advance Certainty would be made when filing the Common Documentation Package (the ‘Pillar One tax return’) in the first year the Group is in-scope of Amount A. The request will be reviewed by a Review Panel of tax authorities.
  • A Comprehensive Certainty Review. This provides an in-scope Group with binding multilateral certainty over the calculation and allocation of profit before tax and the elimination of double taxation and its application of all aspects of the new rules for a Period that has ended, building on the outcomes of any advance certainty applicable for the Period. At the end of a review, the Review Panel or Lead Tax Administration shares the outcomes of the review and a recommendation on whether the Group’s application of rules on Amount A is accepted or that changes are required. This should guarantee consistent treatment of the Group and elimination of double taxation for those Groups who cooperate in the process and accept the outcomes of a review.

All three mechanisms are supported by a binding Determination Panel process to resolve any disagreements that arise and guarantee certainty to Groups which act in a cooperative and transparent manner. The Determination Panel process differs from a regular mutual agreement procedure (MAP), as the Determination Panel shall resolve within 90 days any issues that remain after a Review through consensus or through ranked voting on alternative outcomes envisioned by the Competent Authority of the Lead Tax Administration. The consultation provides three options regarding the composition of a Determination Panel, with option A: five Independent Experts, option B: seven Government Officials from the jurisdictions that are involved in the Review, or option C: a Mixed Panel.

In addition, in the absence of a request by the taxpayer, the Tax Certainty Framework includes a possibility for tax administrations to agree to work multilaterally and agree a common approach through a coordinated review. This way, tax administrations can ex officio prevent disputes from arising.

The Inclusive Framework is additionally considering a temporary transitional process to support in-scope Groups in applying the new rules. Where a Group has made reasonable efforts as to its approach to revenue sourcing, the rules can ensure a soft-landing where the filing would be accepted with the comfort that no changes will be required. In this transitional period, the Group would then also receive guidance as to how it could more accurately apply the revenue sourcing rules in future.

Tax Certainty for Issues Related to Amount A of Pillar One

In addition to the Tax Certainty Framework that provides three mechanisms for advance reviews, the consultation document on Tax Certainty for Issues Related to Amount A includes the following components to provide tax certainty to in-scope Groups with respect to application of the rules on Amount A of Pillar One:

  • Dispute prevention and resolution mechanisms. In-scope MNEs benefit from dispute prevention and resolution mechanisms, which will avoid double taxation for Amount A, including all issues related to Amount A (i.e., transfer pricing and permanent establishment profit attribution disputes), in a mandatory and binding manner and without delaying the substantive dispute prevention and resolution mechanism.
  • Developing economies. An elective binding dispute resolution mechanism will be available only for issues related to Amount A for developing economies that are eligible for deferral of their BEPS Action 14 peer review and have no or low levels of MAP disputes. The eligibility of a jurisdiction for this elective mechanism will be reviewed regularly, and jurisdictions that are ineligible by a review will remain ineligible in all subsequent years.

The provisions in the consultation document set out a mandatory and binding mechanism for a dispute resolution panel that should resolve transfer pricing and permanent establishment profit attribution disputes which Competent Authorities are unable to resolve through a MAP within two years. Furthermore, the dispute resolution process is meant to only be available when any Pillar One Related Issues remain unresolved through other mandatory binding dispute resolution mechanisms, such as arbitration panels. The dispute resolution panel shall consist of five panel members, with two members from the involved Competent Authorities and three experts.

The design of these rules is based on BEPS Action 14 and the BEPS Multilateral Instrument. After the Competent Authorities propose a resolution to the panel, it must deliver its decision within 180 of appointment of the panel’s Chair. Subsequently, within 100 days after receiving the decision, the Competent Authority must request the acceptance of the Group. The Group then has 30 days to accept the proposed solution.

The Task Force notes that there are many aspects on which no consensus has yet been reached, including whether other types of issues than transfer pricing and permanent establishment disputes should be considered “Related Issues”, whether the scope definition should include a quantitative materiality threshold, whether reservations with respect to scope should be permitted and whether the mechanism should apply in circumstances where there is not a bilateral tax treaty between the relevant jurisdictions.

What can taxpayers do? 

Based on the consultation documents, taxpayers that expect to be in scope of Pillar One can assess whether the Tax Certainty Framework should provide them sufficient comfort and assess the expected impact of Pillar One also based on the other consultation documents that have been released. Loyens & Loeff can assist in preparing a Pillar One Impact Assessment Model.

We will keep you informed about further developments. Should you have any question or need assistance in assessing the impact of the rules, please contact a member of our Pillar One & Pillar Two team or your trusted Loyens & Loeff adviser.


For more information, please reach out to Harmen van DamJan-Willem KunenPierre-Antoine Klethi and Aline Nunes.

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