Open AccessProblems of Base Erosion and Anti-Abuse Tax
Author(s) -
James G.S. Yang,
Leonard J. Lauricella
Publication year - 2020
Publication title -
european journal of business and management research
Language(s) - English
Resource type - Journals
ISSN - 2507-1076
DOI - 10.24018/ejbmr.2020.5.4.44
Subject(s) - base erosion and profit shifting , tax planning , tax avoidance , multinational corporation , ad valorem tax , tax law , business , tax reform , value added tax , income tax , indirect tax , direct tax , economics , law and economics , public economics , finance
The United States (U.S.) has a new tax law known as The Tax Cuts and Jobs Act of 2017 (TCJA) [1]. It imposes many new provisions dealing with international tax from a U.S. perspective, including several that were designed to prevent the erosion of the U.S. tax base. This article discusses the reasons for these new anti-base erosion provisions and explains how they work. It points out some of the international tax planning techniques used by U.S. and other multinational corporations to shelter income from high taxes. It discusses the temporary and in some cases permanent disallowance of deductions for interest expense, the disallowance of royalty expenses, and the new base erosion and anti-abuse tax (BEAT). This paper also presents examples and offer tax planning strategies.