What’s Next After Amount A?

Abstract

An agreement on a two-pillar solution to the taxation of the digitalized economy brokered by the OECD was signed in 2021 with great fanfare by over 140 countries. The second pillar of that project—a global minimum tax—has moved ahead, with over 40 countries having signed up to adopting the OECD GLoBE model rules into domestic law (subject to a carve-out for the United States pursuant to a side-by-side agreement reached in early 2026. But the first pillar—the plank that was supposed to provide a solution to the digitalized economy—has stumbled. While Amount B of Pillar 1—a proposal for a streamlined transfer pricing solution—has shown some traction, plans for a multilateral convention for Amount A—involving a proposal to reallocate a portion of multinationals’ global profits to jurisdictions based on market—hit a roadblock. Although countries are regrouping to attempt to develop alternate solutions, the parameters, guiding principles, and objectives of what that might look like are unknown.

The political and fiscal concerns that led countries down the road of attempting the complex and messy effort of a formulary apportionment approach to taxing digital activities have not gone away. One lesson from the failure of Amount A may be that a multilateral approach to addressing the question of taxing new forms of doing business is not a viable one—consideration of regional, plurilateral, bilateral and even unilateral approaches is warranted. Despite the lack of progress on Amount A as a standalone project, it may still represent a fundamental shift in the recognition of destination-based taxation as a legitimate alternative to source-based taxation—or taxation based on “value creation.”

Before exploring alternative paths to tackling the international tax challenges that Pillar 1 was attempting to solve, this Article begins by questioning what and how the approach offered by Amount A went wrong. Part II tries to make sense of the goals of Amount A, and considers why negotiators were unable to achieve them. Relevant to this question is evaluation of whether Amount A’s failure should be taken as an indication that a comprehensive multilateral approach to addressing international tax challenges is unachievable. Part III looks at whether it is still productive to continue work on comprehensive multilateral approaches to solve these concerns, or whether other approaches—unilateral, bilateral, or pluralistic—might be more productive. A separate question is selecting the right forum for continued work on coordination of international tax reforms. Part IV takes a broader lens to consider non-tax alternatives to what has been characterized as a tax problem but may be symptomatic of larger societal concerns, and to preview the next stage of developments in this area. Debates over digital taxation may be outdated, as artificial intelligence promises to be even more disruptive to the global economy than the digital business models have been.