Treasury Drops the BEAT—Final Base Erosion and Anti-Abuse Tax Regulations

11 December 2019
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Key takeaways:
  • Treasury and the IRS have released Final and Proposed Regulations on the base erosion and anti-abuse tax (BEAT) introduced in 2017 tax reform legislation.
  • The Final Regulations, which are now in effect, apply the BEAT in an inflexible way to a number of transactions between U.S. taxpayers and their foreign affiliates.
  • The Final Regulations do not provide relief that taxpayers had requested for offsetting transactions between related taxpayers (netting). The BEAT will apply to those transactions on a gross basis.
  • The Proposed Regulations include a helpful waiver rule allowing taxpayers to permanently give up tax deductions in order to avoid becoming subject to the BEAT.