Tax Specialists Call For Generous Reading Of BEAT Provision

Law360 (February 22, 2018, 4:41 PM EST) -- A literal reading of one of the new international provisions in the recent federal tax overhaul could have the unintended consequence of encouraging U.S. companies to change their operations to avoid the harsh treatment, practitioners said.

Tax specialists have clamored for an answer about how to calculate the new base erosion and anti-abuse tax, or BEAT, in cases where intercompany services provided to the U.S. entity contain a markup. While services charged at cost are exempt from the “base erosion minimum tax amount” the new law imposes, those with a markup aren’t — or aren’t fully exempt.

Under a strict reading...

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