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Base Erosion and Anti-Abuse Tax: Proposed Regulations Do Not Concede Much
17 December 2018
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The Treasury and the IRS have issued Proposed Regulations on the base erosion and anti-abuse tax (BEAT) introduced in last year’s tax reform.
The regulations generally apply the rules in an inflexible manner that can result in a broad application of BEAT to many transactions, thereby increasing the tax liability of US taxpayers.
The regulations do not provide a netting rule to reduce BEAT that is payable when a US corporation and a foreign related party make crossing payments to each other which are net settled.
Groups that make payments to foreign affiliates will need to evaluate their gross receipts, deductions and intercompany transactions to determine whether the BEAT applies to them.
Gary M. Friedman
Peter A. Furci
Matthew D. Saronson
Peter F.G. Schuur
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