US publishes final and proposed base erosion anti-abuse tax regs

The US on December 2 released 343 pages of final and proposed regulations on the base erosion and anti-abuse tax (BEAT).

The BEAT, added in the 2017 Tax Cuts and Jobs Act (TCJA), aims to prevent large multinational groups from reducing their US tax liability by making deductible payments to foreign related parties and through credits.

The regulations provide guidance regarding which taxpayers will be subject to new section 59A tax, the determination of what is a base erosion payment, the method for calculating the base erosion minimum tax amount, and the required base erosion and anti-abuse tax resulting from that calculation. The regulations also provide details on a reporting requirement related to the tax.

The BEAT applies to corporate taxpayers with annual gross receipts averaging more than $500 million over a three-year period.

The IRS said the final BEAT regulations retain the basic approach of proposed regulations issued on December 21, 2018, but make some changes.

The proposed BEAT regulations would modify rules set forth in the final regulations relating to how a taxpayer determines its aggregate group for purposes of determining gross receipts and the base erosion percentage. Other proposed provisions provide for an election to waive deductions and address the application of the BEAT to partnerships.