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ARTICLE · 05 APRIL 2019

Coming To Terms With BEAT: Unique Challenges For Asset Managers

Duff and Phelps
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The BEAT is in addition to the taxpayer's regular tax liability.

United StatesWealth Management
Michelle Johnson
Michelle Johnson
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The impact of the new Base Erosion and Anti-Abuse Tax (BEAT) implemented under the Tax Cuts and Jobs Act (TCJA) in 2018 is coming into focus for asset management firms that just closed out their first tax year under these new U.S. tax rules. Proposed regulations were issued on December 13, 20181 , and companies now have more information to determine how their global transfer pricing policies may be triggering the new tax. 

The BEAT generally applies to taxpayers meeting the following criteria:

  • Total average annual gross receipts for the affiliated group exceed $500 million over the prior three-year period2 ; and 
  • Deductions in the U.S. for intercompany payments for services, interest, certain property/assets and royalties are greater than 3% of total deductions. 
    • For banks and registered securities dealers, the threshold is 2%. 

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