TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Sunday, March 25, 2018

Wells:  Get With The BEAT

Bret Wells (Houston), Get With the BEAT, 158 Tax Notes 1023 (Feb. 18, 2018):

The United States, Europe, and a host of other nations have been grappling with the BEPS phenomenon for several years. The efforts have been fragmented and in some instances, chaotic. With the enactment of section 59A, the United States has taken a bold and decisive step toward protecting the U.S. tax base against inbound profit-shifting strategies. The BEAT protects the nation’s tax base by ensuring that the United States maintains its source country right to a 50-50 profit-split outcome, thus limiting the efficacy of excessive base erosion strategies. This outcome is consistent with existing U.S. treaty obligations, and other trading partners should consider adopting this unilateral approach in their own jurisdictions.

The BEAT should be corrected to expand its applicability in some instances and its scope limited in others. But these suggestions do not diminish the reality that the BEAT represents an important new milestone to protect the U.S. corporate tax base from excessive BEPS strategies. The United States has finally gotten onto the right path with its enactment of section 59A. It is now time for other countries to get with the BEAT.

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