Amount B: A Simplified and Streamlined Transfer Pricing Approach

Amount B provides a simplified framework for applying the arm’s length principle to baseline marketing and distribution activities. It aims to remove complexity from transfer pricing analyses and create more predictable outcomes:

• Reduce transfer pricing disputes
• Lower compliance and administrative burdens
• Improve tax certainty for both taxpayers and tax administrations
• Provide consistent outcomes across countries, especially in low-capacity jurisdictions where data limitations have historically hindered benchmarking.

Identify Qualifying Transactions

The following types of transactions may qualify as in‑scope under Amount B:

• Buy-sell marketing and distribution transactions between associated enterprises for the wholesale distribution of tangible goods to unrelated parties.
• Sales agency and commissionaire transactions where the agent or commissionaire contributes to wholesale distribution of tangible goods to unrelated parties on behalf of a related party.

Qualitative & Quantitative Scoping Criteria

A transaction qualifies only if it can be reliably priced using a one‑sided transfer pricing method (typically the Transactional Net Margin Method), with the distributor or agent as the tested party. The tested party must demonstrate that:

• Its contributions are not unique or valuable.
• It does not engage in high‑integration activities with related parties.
• It does not share economically significant risks in a way that prevents isolated evaluation.

Further, The tested party’s annual operating expenses must:

• Not be lower than 3% of annual net revenues
• Not exceed the upper bound of 20%–30% of annual net revenues

Excluded Transaction Types

The following are not eligible for Amount B treatment:

• Distribution of services, commodities and digital goods
• Retail sales exceeding the de minimis threshold (more than 20% of total net revenues)
• Non‑distribution activities such Manufacturing, R&D or Procurement (unless they can be reliably segmented and priced separately)

Determining the Amount B Return

Pricing is determined through a structured framework:

• The Pricing Matrix: Assigns a return on sales (ROS) based on the entity’s industry grouping, operating expense intensity, and asset intensity.

• Latest Update: The "mixed products" category in Industry Grouping 2 should be used when multiple products from different groupings are sold together and cannot be reliably evaluated separately.

• Operating Expense Cross-check: Acts as a "cap and collar" to ensure the resulting return is not abnormally high or low relative to the entity's actual functions.
• Data Availability Mechanism (DAM): Provides upward adjustments for qualifying jurisdictions (typically low-capacity or high-risk areas) based on sovereign credit ratings.

Latest Technical Clarifications (2026 FAQs)

• Accounts Payable Guardrail: This must be calculated annually rather than on a weighted average basis. If a past-year adjustment is made to the Cost of Goods Sold (CoGS), a re-computation of this guardrail is not required, preventing complex iterative calculations.
• Pricing Range: Taxpayers may rely on any point within a range of +/- 0.5% of the return derived from the pricing matrix.

Practical Limitations of the Framework

While Amount B aims to simplify transfer pricing, challenges remain. Adoption is optional for jurisdictions , which may lead to inconsistent application and potential double taxation if one country recognizes the approach and the other does not. Furthermore, while the pricing is "automated," the initial scoping and segmentation remain highly technical and require detailed documentation.