Pillar One Tax Games

The OECD’s Pillar One Blueprint proposes a new taxing right, Amount A, that would shift the pre-tax profits of multinational enterprises (MNEs) from Residence and Source jurisdictions to Market jurisdictions. The Amount A formula provides multiple opportunities for both MNEs and tax jurisdictions to engage in “tax games” that would increase the overall complexity of the international tax system. This article explores some of the possible tax games implicit in both the Amount A formula and the four-step process for identifying “tax-relieving” jurisdictions. Two numerical case studies provide examples of the possible Pillar One tax games, and highlight the resulting increase in tax complexity and tax uncertainty.