What Is Pillar One?
Pillar One is an OECD-led tax reform framework which reallocates part of the taxing rights over the profits of large multinational groups to market jurisdictions.
Also known as: OECD Pillar One, Amount A.
How Pillar One works
Pillar One is one half of the two-pillar reform agreed by the G20 and the OECD Inclusive Framework on 8 October 2021, and the Amount A component provides a co-ordinated reallocation of taxing rights over a portion of the profits of the largest and most profitable multinational groups to market jurisdictions where customers or users are located. A second component, Amount B, aims to standardise the transfer pricing of baseline marketing and distribution activities. Amount A depends on a multilateral convention whose entry into force requires broad ratification, and the fate of existing digital services taxes is linked to it. Implementation status and scope thresholds remain subject to change and to national adoption, so current positions require verification against official OECD and national publications.
Pillar One vs Pillar Two
Unlike Pillar Two, which sets a global minimum effective tax rate for large groups, Pillar One changes where part of the profit is taxed rather than the minimum level of tax paid.
Example
Illustrative example: A very large multinational group sells digital services to users in Country A while booking profits in Country B. Under Amount A, if implemented, a share of the group's residual profit would be allocated to Country A as a market jurisdiction, with Country B relieving the resulting double taxation.
Common misconception
Myth: Pillar One applies to freelancers and small online businesses selling digital services across borders.
Reality: Pillar One is designed only for the largest and most profitable multinational groups, so individual freelancers remain subject to ordinary personal income tax, VAT and permanent establishment rules.
Frequently asked questions
What is the difference between Pillar One and Pillar Two?
Pillar One reallocates part of the taxing rights over large multinational profits to market jurisdictions, whereas Pillar Two introduces a global minimum effective tax rate for large groups through top-up taxes.
Is Pillar One in force?
Pillar One Amount A depends on a multilateral convention requiring broad ratification, so entry into force and current status should be verified against the latest OECD and national publications rather than assumed.
Related terms
- Pillar Two — Companion pillar setting a minimum effective tax rate
- Digital Services Tax (DST) — Unilateral measures Pillar One was meant to replace
- Base Erosion and Profit Shifting (BEPS) — OECD project from which the pillars emerged
- Economic Presence — Nexus concept reallocating taxing rights to market jurisdictions without physical presence
Related guides
- Global tax reform and US digital nomads — Context on the OECD two-pillar reform
Sources
Last verified: 2026-10-09. This entry is general information, not tax or legal advice; rules vary by country and change over time.
