Comments on the Public Consultation Document concerning Pillar One Tax Certainty for issues related to Amount A
June 10, 2022

Business Infrastructure Bureau, KEIDANREN
We thank you for the opportunity to submit our comments. We believe that it

is crucial to eliminate double taxation by ensuring strong dispute prevention andresolution mechanisms whose outcomes bind all jurisdictions. This will ensure theeffectiveness and appropriateness of the Amount A system. The following

comments focus on matters that have not been agreed between the members ofthe Inclusive Framework (IF) in the Public Consultation Document (hereinafter“the Document”). These comments are submitted by the Keidanren’s Business
Infrastructure Bureau, based on discussions held by the “Corporate Liaison Groupon Pillar 1 - Amount A 1”.

1. Scope of dispute resolution (Article 19 paragraph 1 and footnote 3)
All disputes related to Amount A should be covered. No quantitative materiality

threshold to narrow down the scope should be applied. Further, reservations withrespect to scope should not be permitted.

A mechanism to resolve disputes between jurisdictions which have notconcluded bilateral tax treaties such that both jurisdictions are subject to theoutcome should be established.

While the Document focuses on dispute resolution between two jurisdictions,disputes involving more than two jurisdictions may arise where complex supply

chains are concerned, for example. Therefore, the OECD should clarify how amulti-jurisdictional dispute would be resolved.

2. Specific issues related to each step
2.1 MAP stage
Competent authorities are allowed to request additional information (Article 19

Paragraph 7). Requests for additional information should be kept to a minimum,

since it may not be possible to retrospectively collect accurate information on
1

Please see footnote 1 of our comments on the revenue sourcing rules:(https://www.keidanren.or.jp/en/policy/2022/018.html)

1relationships with customers or other parties.

In addition, there may be cases where Amount A calculations and supporting

information are held centrally by the Group’s ultimate parent entity (UPE). In

these cases, requests from competent authorities should be made to the UPE
through the tax authority in the UPE jurisdiction.

2.2 Establishment of a dispute resolution panel
Article 19 Paragraph 16 sets out the composition of members of a dispute

resolution panel. Given that the MAP subject to dispute resolution could not beagreed upon by the tax authorities of the Contracting Jurisdictions, the panel

should be composed entirely of independent experts to ensure neutrality andfairness. However, we understand that the dispute resolution is closely interlinked

with the sovereignty of jurisdictions. Thus, a panel composed of both independent
experts and government experts may be acceptable, but the independent experts
should constitute a majority. It could be desirable that the conditions for selectionof independent experts be clearly defined, and ensure that the experts selected areindependent and have no interest in the Contracting Jurisdictions.

Secondly, Article 19 Paragraph 19, and the commentary on Article 19

Paragraph 70 state that an MNE Group may not disclose any information received

in the dispute resolution process to any third parties. However, the dispute

resolution process may impact the financial audit of the MNE Group, and theGroup may wish to obtain advice from tax advisers in relation to the dispute.

Therefore, there should not be excessive restrictions on either the information
which may be disclosed or the entities to which information may be disclosed.

2.3 Dispute resolution panel review
Firstly, to ensure fairness, a Covered Group should be given the opportunity tomake representations to the dispute resolution panel.

Secondly, at least for the initial periods following introduction of Amount A, it

should be possible to decide on a compromise between the two competentauthorities’ proposals rather than having to choose one, as prescribed by Article
19 Paragraph 28 (g) of the Document. This considers the needs of developing
countries which have applied the elective mechanism.

2.4 Results of dispute resolution panel review
Article 19 Paragraph 28 (i) of the Document states that “all members of the2

Covered Group directly affected by the case indicate in writing whether they

accept the proposed Competent Authority resolution within 30 days.” However,given the potentially significant number of affected constituent entities, it should

be possible for a Coordinating Entity to confirm acceptance on behalf of allaffected entities.

Secondly, Article 19 Paragraph 29 of the Document states that “a disputeresolution panel decision pursuant to this Article shall not be binding on theContracting Jurisdictions and shall not be implemented if the Competent
Authorities of the Contracting Jurisdictions agree on a different resolution of allunresolved Related Issues”. The possibility of an outcome other than the decisionof the dispute resolution panel could undermine the MNE Group’s tax certainty,

particularly considering that by this stage two years will have passed since thecommencement of the MAP. Further, this could undermine the authority of thedispute resolution panel. It should be assumed that the Contracting Jurisdictions
will be subject to the decision of the dispute resolution panel.

3. Elective binding dispute resolution panel mechanism (Article 20)
Given the risk that disputes related to double taxation and so forth are left

unresolved, incentives could be provided for jurisdictions eligible for the elective
mechanism, to encourage its application.

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