The BEAT and the Treaties

12 Pages Posted: 21 Aug 2018 Last revised: 20 Oct 2018

See all articles by H. David Rosenbloom

H. David Rosenbloom

Caplin & Drysdale, Chartered

Fadi Shaheen

Rutgers, The State University of New Jersey - School of Law, Newark

Date Written: August 1, 2018


The focus of this paper is the relationship of the Base Erosion and Anti-Avoidance Tax (the BEAT) to the income tax conventions in force to which the United States is a party. Courts generally seek to resolve apparent conflicts between the Code and the treaties. They are reluctant to approve a statutory override of negotiated treaty provisions even when a conflict is found. We believe they would be even less inclined to do so in the absence of some indication that Congress intended that result with respect to a statute enacted under a special reconciliation procedure that did not contemplate treaty overrides, with legislative history affirmatively indicating an intention not to override, and with nothing to the contrary in the statutory text. We believe that the BEAT’s conflicts with the nondiscrimination provision and its reconcilable inconsistency with the foreign tax credit provision of U.S. treaties do not constitute treaty overrides. Therefore, for purposes of calculating the BEAT, deductions for otherwise deductible payments to related persons resident in treaty countries and foreign tax credits for foreign taxes paid to treaty countries should be allowed.

Keywords: International taxation, section 59A, BEAT, Base Erosion Anti-Abuse Tax, alternative minimum tax, income tax treaties, treaty override, canons of construction, supremacy clause, nondiscrimination, foreign tax credit

JEL Classification: K33, K34

Suggested Citation

Rosenbloom, H. David and Shaheen, Fadi, The BEAT and the Treaties (August 1, 2018). Tax Notes International, Vol. 92, No. 1, 2018, Available at SSRN: or

H. David Rosenbloom

Caplin & Drysdale, Chartered ( email )

One Thomas Circle, N.W.
Washington, DC 20005
United States
(202) 862-5037 (Phone)
(202) 429-3301 (Fax)

Fadi Shaheen (Contact Author)

Rutgers, The State University of New Jersey - School of Law, Newark ( email )

Newark, NJ
United States

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