Pillar 1: Market Jurisdiction Taxing Rights (Amount A)

Pillar 1 is the first pillar of the Two-Pillar Solution and addresses the challenge that highly digitalised and consumer-facing business models create significant value in markets without establishing a taxable presence there. Pillar 1 creates a new taxing right — Amount A — that allocates a share of the residual profit of very large and very profitable MNEs to market jurisdictions, regardless of physical presence.

Pillar 1 also contains simplified rules for Amount B, which establishes a standardised return for baseline distribution activities, and enhanced dispute prevention and resolution mechanisms. Implementation requires a Multilateral Convention (MLC).

Discussion on redistribution of taxing rights traces back to BEPS Actions 1 and 7 (2013–2015), which identified the problem but did not provide a solution. In 2019, the OECD put forward the Pillar 1 concept. After lengthy negotiations, the Inclusive Framework statement was adopted in October 2021 by 136 of the then 140 members. The draft MLC for Amount A was released in October 2023. Amount B was finalised in February 2024. An update to the MLC draft was issued in June 2024, but the signing deadline was repeatedly postponed.

With the inauguration of the Trump administration in January 2025, Pillar 1 negotiations were effectively suspended. The US signalled its withdrawal from the Pillar 1 process and threatened retaliatory measures against countries maintaining digital service taxes. As a result, several jurisdictions extended or introduced their own DSTs, further increasing the political uncertainty surrounding Pillar 1.

Pillar 1 (Amount A) applies to MNE groups with: (1) global revenues above EUR 20 billion and (2) profit margins (profit before tax/revenue) above 10%. The revenue threshold is planned to be reduced to EUR 10 billion after 7 years, subject to successful implementation of Amount A. Approximately 100 of the world's largest groups are covered by the initial threshold. Regulated financial services and extractive industries are excluded. Amount A transfers 25% of residual profit (profit above a 10% return) to market jurisdictions proportionally to revenues sourced there. Market jurisdictions must meet a minimum revenue threshold (EUR 1 million, or EUR 250,000 for jurisdictions with GDP below EUR 40 billion) to receive Amount A allocations. Amount B applies to all MNEs with standardised baseline distribution activities on an arm's-length basis.

• Applies to MNE groups with global revenues above EUR 20 billion and profit margins above 10%
• Calculation of Amount A (25% of residual profit) and allocation to market jurisdictions meeting the nexus threshold
• Signature and ratification of the multilateral convention (MLC) by at least 30 jurisdictions
• Abolition of existing digital service taxes and similar unilateral measures
• Compliance with the standstill commitment: no introduction of new or expansion of existing digital service taxes until the MLC enters into force
• Application of Amount B for standardised baseline distribution remuneration
• Use of enhanced MAP procedures and arbitration for dispute resolution

Pillar 1 and Pillar 2 are sister initiatives of the OECD 2-Pillar Solution — cross-reference was missing.

3 corrections:
- DE/EN inconsistency regarding STTR mention in summary
- predecessors field uses framework_id instead of slug
- STTR incorrectly classified as dispute resolution mechanism under Pillar 1
2 updates:
- No update since June 2024 — significant 2024/2025 developments missing
- official_url uses deprecated OECD URL format
6 clarifications.
2 notes.