Treasury has released proposed regulations (the Proposed Regulations) for the Base Erosion and Anti-Abuse Tax (BEAT) under new Section 59A. The BEAT is a minimum tax that certain corporations are required to pay on payments to non-US related parties. The Proposed Regulations, released on December 13, 2018, are the first regulatory guidance under Section 59A, which was enacted by the 2017 tax reform legislation (the Act).
The regulations generally provide guidance with respect to several aspects of the BEAT provisions, two of which are particularly important to insurers: (1) rules for determining whether a taxpayer is an applicable taxpayer subject to the BEAT provisions, and (2) rules for determining the BEAT liability. (For general coverage of the Proposed Regulations, and prior coverage on the Act, refer to the ‘See also’ section at the end of this document.)
The new regulations generally are proposed to apply to tax years beginning after December 31, 2017. Treasury states that taxpayers may rely on the Proposed Regulations until final Section 59A regulations are published, provided that the taxpayer and all related parties consistently apply the Proposed Regulations.
The Proposed Regulations, provide guidance related to the mechanics of determining a taxpayer’s BEAT liability and clarify the application of Section 59A to partnerships, banks, registered security dealers, and US consolidated groups. Multinational insurance companies should consider taking the following actions:
PwC Tax Insight: Treasury issues proposed BEAT rules
PwC Tax Insight: Preliminary highlights of the proposed BEAT regulations
PwC Tax Insight: IRS releases draft Section 59A form for computing BEAT
Insurance Tax Leader, PwC US