Treasury, IRS issue final regulations on new international provision, the base erosion and anti-abuse tax

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Treasury, IRS issue final regulations on new international provision, the base erosion and anti-abuse tax

An official website of the United States Government

IR-2019-194, December 2, 2019

WASHINGTON — The Internal Revenue Service issued final regulations and proposed regulations today on the base erosion and anti-abuse tax.

The Tax Cuts and Jobs Act (TCJA) made major changes to the tax law including revamping the U.S. international tax system. Among other changes made by the TCJA, section 59A imposes a tax equal to the base erosion minimum tax amount for certain taxpayers beginning in tax year 2018. When applicable, this tax is in addition to the taxpayer’s regular tax liability. This provision primarily affects corporate taxpayers with annual gross receipts averaging more than $500 million over a three-year period that make deductible payments to foreign related parties.

The regulations provide detailed guidance regarding which taxpayers will be subject to section 59A, 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.

Updates on the implementation of the TCJA can be found on the Tax Reform page of IRS.gov.

An official website of the United States Government

IR-2019-194, December 2, 2019

WASHINGTON — The Internal Revenue Service issued final regulations and proposed regulations today on the base erosion and anti-abuse tax.

The Tax Cuts and Jobs Act (TCJA) made major changes to the tax law including revamping the U.S. international tax system. Among other changes made by the TCJA, section 59A imposes a tax equal to the base erosion minimum tax amount for certain taxpayers beginning in tax year 2018. When applicable, this tax is in addition to the taxpayer’s regular tax liability. This provision primarily affects corporate taxpayers with annual gross receipts averaging more than $500 million over a three-year period that make deductible payments to foreign related parties.

The regulations provide detailed guidance regarding which taxpayers will be subject to section 59A, 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.

Updates on the implementation of the TCJA can be found on the Tax Reform page of IRS.gov.

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