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The BEAT Proposed Regulations: Use of Common Law Doctrines

With its new reach, the Base Erosion and Anti-Abuse Tax ( BEAT ) under Section 59A has now come into sharp focus for many large corporate taxpayers, particularly in light of the phase-in of the 10% BEAT rate for taxable years beginning in 2019. While labeled an “inbound provision,” the BEAT may apply most harshly to U.S. based multinational corporations. This is because of the adverse treatment under the BEAT rules of U.S. tax attributes, such as net operating loss ( NOL ) carryovers and foreign tax credits ( FTCs ) for foreign taxes imposed on foreign source income. Many corporate taxpayers who previously sheltered regular tax liability with NOLs or FTCs may find themselves facing a BEAT liability. Taxpayers engaged in services or other industries with primarily “below-the-line” deductions also are likely to be hit hard by the BEAT.

The full article was originally published in the March–April 2019 issue of the International Tax Journal. Read the full article “The BEAT Proposed Regulations: Use of Common Law Doctrines.”