Treasury has released proposed regulations (the Proposed Regulations) for the Base Erosion and Anti-Abuse Tax (BEAT) under Section 59A. The BEAT rules require certain corporations to pay a minimum tax on payments to non-US related parties. The Proposed Regulations, released on December 13, 2018, are the first regulatory guidance under new Section 59A, which was enacted by the 2017 tax reform act (the Act).
The Proposed Regulations provide needed guidance related to the mechanics of determining, among other things, the applicable taxpayer status, a taxpayer’s base erosion percentage, and a taxpayer’s modified taxable income (MTI). The Proposed Regulations also address the application of Section 59A to certain partnerships, banks, registered securities dealers, insurance companies, and consolidated groups. The Proposed Regulations reserve on the application of the BEAT to certain expatriated entities.
You can read some of the key highlights below along with a more in-depth PwC Tax Insights.
On December 19, PwC covered the Proposed Regulations on a “Tax reform readiness” webcast: “We got the BEAT (proposed regulations).”