IRS Allows Alternative Method for Base Erosion Tax Exception

Companies wanting to claim the services cost method exception to their base erosion tax don’t have to use the actual services cost transfer pricing method, the IRS said in a private letter ruling. They may need additional documentation, though.

The base erosion and anti-abuse tax, known as the BEAT, seeks to combat profit shifting out of the US by imposing a tax on an alternative tax base, one that isn’t reduced by certain payments to foreign related parties that would normally be deductible.

• BEAT allows for a services cost method exception, which lets taxpayers exclude certain amounts paid for ...