The first U.S. tax returns, including the new Base Erosion and
Anti Abuse Tax (BEAT), have been filed and taxpayers who paid the
new tax are scrambling to make changes to their intercompany
transfer pricing policies before the rate doubles next year. Global
taxpayers with significant intangible property (IP) can be
particularly affected and many of them are reevaluating their IP
structures. This article discusses the interplay of BEAT and one
classic form of IP structures: cost sharing arrangements
(CSAs).
When Does BEAT Apply?
U.S. taxpayers must meet two requirements to be subject to the
BEAT provision. First, they must have a three-year average of gross
receipts greater than $500 million dollars. The scope of applicable
taxpayers for BEAT is defined to exclude regulated investment
companies, real estate investment trusts (REITs) or S-corps.
Second, the U.S. taxpayer's deductions for intercompany
payments for services, interest, certain property / assets
