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The Senate Introduced a Pragmatic and Geopolitically Savvy Inbound Base Erosion Rule

12 Pages Posted: 15 Nov 2017 Last revised: 23 Nov 2017

Itai Grinberg

Georgetown University Law Center

Date Written: November 12, 2017

Abstract

The Base Erosion and Anti-Abuse Tax (BEAT) is a surprising and innovative part of the Senate’s proposed international tax reform package. The BEAT helps level the playing field between U.S.-headquartered and foreign-headquartered companies. It raises enough revenue so that the outbound minimum tax rate is probably lower than it would otherwise need to be given revenue constraints.

Both the House and Senate tax reform bills include significant rules to limit inbound base erosion. Therefore, the BEAT also functions as the Senate’s answer to section 4303 of the House Tax Cuts and Jobs bill. This article compares the BEAT with the House inbound base erosion proposal along various dimensions. It focuses in particular on issues associated with administrability and potential foreign responses. I conclude that the BEAT – unlike the House approach to inbound reform – represents a pragmatic, administrable, and geopolitically savvy policy that helps level the playing field between U.S. and foreign MNCs.

Keywords: inbound, tax reform, international, BEAT

Suggested Citation

Grinberg, Itai, The Senate Introduced a Pragmatic and Geopolitically Savvy Inbound Base Erosion Rule (November 12, 2017). Available at SSRN: https://ssrn.com/abstract=3069770

Itai Grinberg (Contact Author)

Georgetown University Law Center ( email )

600 New Jersey Avenue NW
Washington, DC 20001
United States
202-661-6615 (Phone)

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