OECD Pillar One Amount B: Simplified Transfer Pricing for Distributors

Transfer pricing for routine distributors has long consumed a disproportionate share of tax teams' time. Benchmarking studies, comparability adjustments and the disputes that follow are costly for taxpayers and administrations alike, particularly for the many marketing and distribution entities whose functions are genuinely ordinary. OECD Pillar One Amount B is the response: a simplified and streamlined method for pricing baseline marketing and distribution activities that replaces bespoke benchmarking with a standard formula. The final guidance was released in February 2024 and folded into the OECD Transfer Pricing Guidelines, with supplementary lists of covered and qualifying jurisdictions following in June 2024.

Amount B has been available for fiscal years beginning on or after 1 January 2025. It is not a new tax and it does not reallocate profit between countries in the way Amount A is designed to. Instead, it fixes an arm's length return for qualifying intercompany distribution transactions using a pricing matrix. For groups with distribution subsidiaries in multiple jurisdictions, understanding how the mechanism works and where it applies is now a live compliance question rather than a theoretical one.

What OECD Pillar One Amount B actually is

Amount B sits within Pillar One but is functionally a transfer pricing simplification measure. It provides a standardised way to determine the arm's length return earned by a distributor that buys goods from a related supplier and on-sells them to third parties, without significant risk assumption or valuable intangibles. Rather than searching for external comparables, an in-scope distributor applies a global pricing matrix that yields a return on sales. The stated aims are to reduce compliance burden, improve tax certainty and free up scarce administrative resources, with a particular emphasis on helping lower-capacity jurisdictions that struggle to source reliable comparables. Adoption is optional at the jurisdiction level: the Inclusive Framework did not reach consensus on making Amount B mandatory, so each country decides whether and how to implement it.

How the return-on-sales pricing matrix works

At the heart of Amount B is a pricing matrix that produces an arm's length return on sales for in-scope transactions. The matrix is built from three inputs: the distributor's industry grouping, its operating expense intensity (operating expenses relative to net revenue) and its operating asset intensity (net operating assets relative to net revenue). Depending on where a distributor falls across these dimensions, the matrix returns a margin generally between 1.5% and 5.5% of net revenue. Two adjustments then refine the result. An operating expense cross-check applies a cap-and-collar: if the matrix return, expressed as a ratio of operating profit to operating expenses, falls outside a defined range, it is pulled back to the nearest boundary. A separate data availability mechanism adjusts the return for tested parties in qualifying jurisdictions where the global dataset contains too few comparables, using the jurisdiction's sovereign credit rating as a proxy for risk. The result is a single, formula-driven margin rather than a benchmarked range.

Which distributors are in scope, and which are excluded

Amount B covers buy-sell distributors and, where a jurisdiction elects, sales agents and commissionaires performing economically comparable functions. The transaction must involve wholesale distribution of tangible goods. Several exclusions matter in practice. Distributors whose retail sales exceed a de minimis threshold of 20% of total net revenue fall outside the scope, as do entities distributing commodities or services. Distributors that also perform non-baseline functions such as manufacturing, research and development or procurement are excluded unless those activities can be reliably segmented and separately priced. A quantitative screen also applies: an entity generally qualifies only where its operating expenses sit between 3% and a ceiling of 20% of net revenue, with jurisdictions permitted to raise that ceiling to 30%. The effect is to confine Amount B to genuinely routine distributors and to keep entities with meaningful risk, intangibles or economically significant additional functions in the ordinary transfer pricing regime.

Jurisdictional adoption from 2025: a fragmented picture

Adoption has been slower and more uneven than many anticipated. Because Amount B is optional, two distinct questions arise for every country: will it apply the approach domestically, and will it respect the outcome when a counterparty jurisdiction applies it. The Inclusive Framework agreed a political commitment under which members undertake to respect Amount B outcomes determined by a covered jurisdiction, and to relieve resulting double taxation where a tax treaty is in force. The list of covered jurisdictions currently comprises 66 countries, drawn largely from low and middle-income members, for the period to 31 December 2029. The United States moved early, with Treasury Notice 2025-04 permitting taxpayers to elect Amount B for in-scope distributors from 1 January 2025. The United Kingdom has not adopted the approach but reaffirmed its Pillar One commitment in the October 2024 Corporate Tax Roadmap. Several EU member states, including Italy and Poland, have reported no domestic adoption to date, and others have yet to take a formal position. The practical consequence is a patchwork in which a group may face Amount B pricing on one side of an intercompany transaction and conventional benchmarking, or an unwillingness to grant correlative relief, on the other.

How multinational groups should prepare their distribution pricing

The immediate task is a scoping exercise. Groups should map their distribution entities against the qualifying-transaction definition and the exclusions, paying close attention to the retail de minimis threshold, the operating-expense screen and any non-baseline functions that would need to be segmented. Where entities qualify, model the matrix return and compare it against current outcomes: the difference may be material, and it will vary by industry grouping and asset intensity. Just as important is the jurisdictional overlay. For each intercompany flow, identify whether the distributor's jurisdiction and its counterparty have adopted Amount B or committed to respect it, because mismatches create double-taxation exposure that existing benchmarking may have avoided. Documentation should be refreshed to evidence why an entity is, or is not, baseline, to record the matrix inputs and adjustments, and to support any election. Groups should also revisit advance pricing agreements and existing benchmarking studies, since these may need to be reconciled with, or defended against, an Amount B result.

Amount B is best understood as a structural shift in how routine distribution is priced rather than a marginal technical change. The mechanics are prescriptive, but the judgement moves upstream, into determining scope, segmenting functions and managing the risk that neighbouring jurisdictions treat the same transaction differently. Groups that carry out a disciplined scoping and modelling exercise now, and align their documentation and treaty positions accordingly, will be far better placed than those that wait for the jurisdictional map to settle. Given the pace of adoption, that map is likely to keep moving for some years yet, which makes early, deliberate preparation the more valuable course.

Key takeaways

• Amount B is an optional simplified transfer pricing method, effective for fiscal years beginning on or after 1 January 2025, that fixes an arm's length return for baseline marketing and distribution activities.
• Pricing uses a global matrix driven by industry grouping, operating expense intensity and operating asset intensity, producing a return on sales generally between 1.5% and 5.5%, refined by an operating-expense cap-and-collar and a data availability mechanism.
• Scope is limited to wholesale distributors of tangible goods; entities with retail sales above 20% of net revenue, operating expenses outside roughly 3%-20% (up to 30%) of net revenue, or unsegmented non-baseline functions are excluded.
• Adoption is fragmented: 66 covered jurisdictions are subject to a political commitment, the US allows an election via Notice 2025-04, while the UK and several EU states have not yet adopted the approach.
• Mismatches between adopting and non-adopting jurisdictions create double-taxation risk, so groups must assess both sides of each intercompany distribution flow.
• Groups should scope in-scope entities, model matrix returns against current outcomes, refresh transfer pricing documentation and revisit APAs and benchmarking studies.