David Rosenbloom Discusses with Tax Notes One Reason Congress Should Revisit the BEAT

The BEAT’s workings are so full of agonizing difficulties that it might make sense to throw the whole thing in the trash and start from scratch. As a guide for Congress when it inevitably reworks or replaces the BEAT, Tax Notes compiled a list of some of its major problems that should be avoided in the design of BEAT 2.0.

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8. The BEAT may violate the nondiscrimination clause of tax treaties.
Also, the denial of FTCs for BEAT payments may violate treaties. Who cares, you may say? The damage to the U.S. treaty network is subtle and likely to become clear only over the long term. “The result of this cavalier treatment of U.S. treaty obligations will be to reduce U.S. leverage in negotiations,” warns H. David Rosenbloom. “The U.S. multi-national community will be very much on its own insofar as the taxation of operations outside the U.S. is concerned” (H. David Rosenbloom, “International Aspects of U.S. ‘Tax Reform’ — Is This Really Where We Want to Go?” Martindale.com (Feb. 6, 2018)).

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Excerpt taken from the article "Economic Analysis: 10 Reasons Congress Should Revisit the BEAT" by Martin A. Sullivan for Tax Notes.