Strategizing International Tax Best Practices – by Keith Brockman

Posts tagged ‘BEAT’

TCJA guidance

Treasury is now fairly confident that all TCJA guidance will be finalized by October 1st.

Treasury deputy assistant secretary for international tax affairs, Lafayette G. “Chip” Harter III, recently shared his ambitious agenda, including the following:

  • Section 901(m) regulations, imminent
  • Section 163(j) interest, OIRA received proposed regulations February 7th; final reg review is complete
  • FDII regulations, spring; documentation requirements have been reworked
  • GILTI regulations, summer
  • Foreign tax credit regulations and others, in the pipeline

 

  • Treaties with Chile, Hungary and Poland; may be reworked, as there are concerns that the BEAT violates Articles 23 (relief from double taxation) and 24 (nondiscrimination) of the U.S. model income tax treaty

US Int’l developments

The US developments are centered around the new regulations for BEAT and Foreign Tax Credit (FTC).

The new BEAT regulations include:

  • Excludes non-recognition transactions re: Sec. 332, 351, 355, and 368
  • Allows foregoing a deduction, albeit it will be for all US federal tax purposes
  • Clarifies anti-abuse rules

The final FTC regulations include:

  • Reducing previously taxed E&P baskets to 10, from 16
  • Gross tested income is tiered up for purposes of allocating interest expense
  • Foreign tax redeterminations are addressed
  • Foreign branch rules are detailed

Additionally, Section 987 regulations are deferred by another year.

EY’s Global Tax Alert details the latest developments.

Click to access 2019G_005410-19Gbl_German%20Federal%20Council%20approves%20Research%20Allowance%20Act.pdf

US Regs: BEAT overview

KPMG’s initial observations of the final and proposed BEAT regulations are attached for reference:

Click to access 19569.pdf

US BEAT/FTC Reg’s

Final and proposed Regulations were issued with respect to the Foreign Tax Credit and BEAT.  Noting this regulation package collectively amounts to over 650 pages, it will require time and attention to webcasts, etc. to fully understand the breadth of these rules, especially as they may pertain to 2018 and/or 2019.

Click to access td-9882.pdf

Click to access reg-105495-19.pdf

Click to access 2019-25744.pdf

Click to access 2019-25745.pdf

US: TCJA Reg chronology

Pending developments this year are focused on the Tax Cuts and Jobs Act (TCJA).

This week expectations – Final FTC Regs, final and proposed BEAT Regs

This year (maybe) – Final and proposed Sec. 163(j) Regs (currently at 550 pages)

This year/January 2020 – Sec 267A final and proposed Regs, Sec 863(b) sourcing proposed Regs

by June 30, 2020 – Final FDII regulations, GILTI high-tax exclusion, Sec 250 participation exemption

EY’s Global Tax Alert provides further details, including OECD developments reported on previously

Click to access 2019G_005186-19Gbl_Report%20on%20recent%20US%20intl%20tax%20developments%20-%2015%20Nov%202019.pdf

US: FTC Reg’s on the way

Final and proposed Foreign Tax Credit (FTC) regulations are in review by OMB’s Office of Information and Regulatory Affairs.

These regulations join the pending BEAT regulations in OIRA.

We should expect both sets of regulations in the very near future.

https://home.kpmg/us/en/home/insights/2019/10/tnf-regulations-pending-oira-review-foreign-tax-credit-guidance.html

US: The BEAT goes on

As news of final Base Erosion and Anti-abuse Tax (BEAT) regulations are to be released by OIRA and issued, there are also new proposed BEAT regulations to accompany them.

So, the BEAT goes on, while everyone is still awaiting final foreign tax credit regulations.

As we are approaching the end of the third quarter, this may be a significant development to digest for material changes to the proposed regulations, in addition to some unknowns and uncertainties.

Click to access 2019G_004223-19Gbl_Report%20on%20recent%20US%20intl%20tax%20developments%20-%2020%20Sept%202019.pdf

%d bloggers like this: