The new taxing right established through Amount A of Pillar One only applies to those multinational entity (MNE) groups that fall within the defined scope of Amount A. The scope of Amount A is based on two elements: an activity test and a threshold test.
According to the OECD, the definition of the scope responds to the need to revisit taxing rules in response to a changed economy. The existing international tax rules generally attach a taxing right to profits derived from a physical presence in a jurisdiction. However, given globalization and the digitalization of the economy, the OECD believes that businesses can, with or without the benefit of local operations, participate in an active and sustained manner in the economic life of a market jurisdiction through engagement extending beyond the mere conclusion of sales, in order to increase the value of their products, their sales and their profits.