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Tax revenue from Pillar One Amount A: country-by-country estimates

Author

Listed:
  • Mona Barake

    (Paris School of Economics
    Skatteforsk Center for Tax Research, Norwegian University of Life Sciences (NMBU))

  • Elvin Pouhaër

    (Paris School of Economics)

Abstract

This paper presents first-round simulations of the tax revenues arising from the Pillar One Amount A proposal of the G20/OECD inclusive framework on base erosion and profit shifting for 2016–2025. Amount A aims at revising taxing rights on multinational enterprises with at least €20 billion in revenue and profitability above 10%. We consider the latest available Pillar One Amount A rules as detailed in the “Multilateral Convention to Implement Amount A of Pillar One” (OECD 2023b). In a first step, we identify the multinationals that would be “covered” under Pillar One Amount A. Then, by combining micro and macro data sources, we create a database that approximates these Covered Groups’ worldwide distribution of destination-based revenues, profits, employees, and tangible assets. Destination-based revenues serve to reallocate Amount A profits across jurisdictions. Finally, we account for double taxation relief to obtain country-level net revenue estimates from Pillar One Amount A. The aggregate additional tax revenue arising from Pillar One Amount A varies from €5.7 billion in 2020 to €10.9 billion in 2022. We provide country-specific estimate ranges and a comparison to digital taxes. The trade-off between Amount A and digital taxes is unclear and may vary from one country to another. Testing for the implications of various provisions of Amount A rules, we observe that the extent of taxing rights redistribution is seriously affected by the Marketing and Distribution Safe Harbour (MDSH), while the profit reallocated to low and lower-middle-income jurisdictions crucially depends on the tail-end revenues provision.

Suggested Citation

  • Mona Barake & Elvin Pouhaër, 2025. "Tax revenue from Pillar One Amount A: country-by-country estimates," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 32(3), pages 680-740, June.
  • Handle: RePEc:kap:itaxpf:v:32:y:2025:i:3:d:10.1007_s10797-024-09859-4
    DOI: 10.1007/s10797-024-09859-4
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    References listed on IDEAS

    as
    1. Thomas Tørsløv & Ludvig Wier & Gabriel Zucman, 2023. "The Missing Profits of Nations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(3), pages 1499-1534.
    2. Michael Devereux & Martin Simmler, 2021. "Who Will Pay Amount A?," EconPol Policy Brief 36, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    3. Mona Barake & Elvin Le Pouhaër, 2023. "Tax Revenue from Pillar One Amount A: Country-by-Country Estimates," Working Papers halshs-04039288, HAL.
    4. Felix Hugger & Ana Cinta González Cabral & Pierce O’Reilly, 2023. "Effective tax rates of MNEs: New evidence on global low-taxed profit," OECD Taxation Working Papers 67, OECD Publishing.
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    More about this item

    Keywords

    Pillar One Amount A; Two-pillar solution; International taxation;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • H27 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other Sources of Revenue
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects

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