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Problems of Base Erosion and Anti-Abuse Tax

Author

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  • James G. S. Yang

    (Montclair State University, USA)

  • Leonard J. Lauricella

    (Montclair State University, USA)

Abstract

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.

Suggested Citation

  • James G. S. Yang & Leonard J. Lauricella, 2020. "Problems of Base Erosion and Anti-Abuse Tax," European Journal of Business and Management Research, European Open Science, vol. 5(4), July.
    • Handle: RePEc:epw:ejbmr0:v:5:y:2020:i:4:id:50044
    DOI: 10.24018/ejbmr.2020.5.4.44
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