IRS issues proposed regulations on key new international provision, the base erosion and anti-abuse tax

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IRS issues proposed regulations on key new international provision, the base erosion and anti-abuse tax

IR-2018-250, December 13, 2018

IR-2018-250, December 13, 2018

WASHINGTON — The Internal Revenue Service issued proposed regulations today on the section 59A base erosion and anti-abuse tax.

WASHINGTON — The Internal Revenue Service issued proposed regulations today on the section 59A base erosion and anti-abuse tax.

The Tax Cuts and Jobs Act (TCJA), legislation passed in December 2017, made major changes to the tax law for 2018 and future years, including revamping the U.S. international tax system. Among other changes made by the TCJA, new 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 new provision will primarily affect corporate taxpayers with gross receipts averaging more than $500 million over a three-year period who make deductible payments to foreign related parties.

The Tax Cuts and Jobs Act (TCJA), legislation passed in December 2017, made major changes to the tax law for 2018 and future years, including revamping the U.S. international tax system. Among other changes made by the TCJA, new 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 new provision will primarily affect corporate taxpayers with gross receipts averaging more than $500 million over a three-year period who make deductible payments to foreign related parties.

The proposed 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.
Treasury and IRS welcome public comments on these proposed regulations. For details on submitting comments, see the proposed regulations.

The proposed 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.
Treasury and IRS welcome public comments on these proposed regulations. For details on submitting comments, see the proposed regulations.

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

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

Research & References of IRS issues proposed regulations on key new international provision, the base erosion and anti-abuse tax|A&C Accounting And Tax Services
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