Base Erosion Anti-abuse Tax (BEAT) | U.S. Taxation

To prevent large U.S. corporations from shifting profits to low-tax countries, the Tax Cuts and Jobs Act of 2017 introduced the Base Erosion Anti-Abuse Tax (BEAT). The BEAT provisions apply to any U.S. company that:
(1) is a C corporation
(2) had at least $500 million in gross receipts over the prior 3 years
(3) has excessive deductible payments to a related party (a non-U.S. entity of which the U.S. corporation owns at least 25%)

A corporation is deemed to have "excessive" deductible payments if its tax base erosion items (royalties, interest, rent, management fees) exceed 3% of its deductible payments.

If these provisions apply, then the U.S. corporation's federal income tax liability will be the greater of:
(a) the company's regular tax liability, or
(b) 10% of the company's taxable income, after adding back the base erosion items (royalties, interest, rent, management fees)—
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