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


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