Pillar One? Amount B? Should Ukrainian companies look forward to their implementation?

On 17 June 2024, the Organization for Economic Cooperation and Development published on its official website additional guidances regarding the application of one of Pillar One components — Amount B.

Among other things, these guidances determine a list of jurisdictions to which Amount B may apply.

Our state is on the list; however, it should be noted that the very fact of the country’s being included in the list does not mean that Ukraine is now obliged or intends to adopt and incorporate these rules into its legislation.

To recap, Amount B outlines a simplified and streamlined approach to determining whether the terms of intercompany transactions are arm’s length. It applies only to the following baseline activities:

• Buy-sell marketing and distribution transactions where goods are purchased from associated enterprises for wholesale distribution to unrelated parties, provided that the retail distribution share does not exceed a three-year weighted average of 20% in the total scope of its activities
• Sales agency and commissionaire transactions that contribute to wholesale distribution of goods to unrelated parties

Amount B does not apply to:

• Transactions involving intangibles, services, or commodities
• Transactions where companies—in addition to their distribution activities—also perform other functions, which are impossible to isolate for a separate analysis

In general, Pillar One can be applied to multinational businesses with a consolidated revenue exceeding EUR 20 billion. At the same time, Amount B is not subject to a revenue threshold.

Where the companies’ transactions and activities meet certain qualitative and quantitative scoping criteria, benchmarking aimed at determining their arm’s length nature is not required.

Back in July 2023, during the 15th plenary meeting of the Inclusive Framework on BEPS, the representatives of Ukraine signed the updated BEPS implementation Roadmap, and agreed an Outcome Statement on the Pillar One, which, in particular, includes Amount B.

In view of the above, it is advisable to actively monitor the status of implementation of these measures into Ukrainian legislation and be poised to apply Amount B as a mechanism to determine whether in-scope transactions comply with the arm’s length principle.

Subscribe to our Telegram channel "Deloitte Ukraine Voices" to stay tuned on the latest firsthand news, articles, podcasts, and other materials. Hear the voices of our experts!

Back to Tax & Legal Alerts 2024