Abstract

Baseline distribution transactions are relatively simple yet frequently occurring transactions within multinational enterprises. However, from a transfer pricing perspective, they are often associated with high compliance costs and substantial uncertainties for taxpayers. Against this background, the OECD/G20 Inclusive Framework on BEPS has introduced the Simplified and Streamlined Approach (SSA) under Pillar One - Amount B. By providing standardized, arm's length return on sales margins for the wholesale distribution of goods, the SSA intends to reduce compliance costs and increase tax certainty. This chapter initially presents the key aspects of the approach, before critically assessing their implications. The analysis particularly indicates that an incongruent implementation of the SSA across jurisdictions may undermine the intention of simplifying transfer pricing. Moreover, the narrow price range of the SSA could increase the importance of software solutions for controlling transfer prices.