KPMG report: Public consultation document on Pillar One—draft model rules for nexus and revenue sourcing
Public consultation on the first building block of Amount A
Public consultation on the first building block of Amount A
Following the political agreement reached in October 2021 regarding a two-pillar solution to address the tax challenges arising from the digitalization of the economy by 137 members of the OECD/G20 Inclusive Framework on BEPS, the Organisation for Economic Cooperation and Development (OECD) announced in December 2021 a schedule for public consultations on various aspects of its two-pillar plan to address the tax challenges arising from digitalization and globalization of the economy.
The OECD on 4 February 2022 launched the public consultation by releasing for public comment the first building block of Amount A – Draft Rules for Nexus and Revenue Sourcing.
The draft model rules are a “working version,” and do not yet reflect the Inclusive Framework’s consensus on their substance. Rather, the release is described as reflecting “consensus . . . as a procedural matter that public comments should be sought at this time.”
The public consultation document is structured as a general legislative article that articulates the nexus rules and the sourcing principles at a high level, followed by a schedule that sets out detailed rules for assigning each specified category of revenue to market jurisdictions. The intent of the rules is to source revenue to end-market jurisdictions where goods or services are used or consumed. Both the general article as well as the schedule are intended to be binding on implementing jurisdictions.
Comments on the draft are due before 18 February 2022.
Read a February 2022 report [PDF 1.8 MB] prepared by KPMG LLP that examines the draft model rules for nexus and revenue sourcing
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.