The U.S. Contributions to BEPS: GILTI and BEAT (Completed)
Date: Thursday, March 18, 2021
Instructor: William J. Seeger
||10:00am Pacific Time
11:00am Mountain Time
12:00pm Central Time
1:00pm Eastern Time
||1 hour for CPAs
1 hour Federal Tax Related for EAs and OTRPs
1 hour Federal Tax Law for CTEC
This webinar's focus is the overhaul of the International Tax System, which has been ongoing since 2015, and the corresponding impact on current tax practice. Without this knowledge, a tax practitioner will not understand the currently proposed critical policy changes in the International Tax arena.
The topics discussed in this webinar are a sea change in thinking regarding the global economy's corporate taxation. The drivers of the sea change are the U.S. and the OECD. The webinar gives an overview and demonstration of the interrelationships between the U.S. developed GILTI and BEAT, and the OECD inspired Unified Framework of Pillar One and Two. The rules changes driving today's evolving global tax ecosystem stem from:
1. The Tax Cuts and Jobs Act of 2017 ("TCJA"),
2. The finalization of the OECD's 2015 Base Erosion Profit Shifting ("BEPS") initiative. A massive Global effort by OECD member countries, BEPS contains 15 Articles designed to deal with:
a. Various "gaps" of the International Tax System,
b. Businesses continued transition to online and digital platforms in Global International trade, rather than the more traditional "bricks and mortar" presence.
The gap garnering the most attention is the last item, the taxation of the Digital Economy embedded within the OECD's Unified Framework of Pillar One and Pillar two. Pillar One and Two are similar in purpose to GILTI and BEAT.
The TCJA was the United States congressional revenue act that amended the Internal Revenue Code of 1986. Significant changes included reducing tax rates for businesses and individuals, reducing the alternative minimum tax (“AMT”) for individuals, and eliminating AMT for corporations.
The TCJA made substantial changes to the way U.S. multinationals' foreign profits are taxed. The significant elements of this change include the Global Intangible Low Tax Income ("GILTI") and The Base Erosion and Anti-Abuse Tax ("BEAT"). The GILTI is an outbound anti-base erosion provision. GILTI reduces the incentive to shift corporate profits out of the United States via base shifting a corporation's principal asset, intellectual property ("I.P."). The BEAT penalizes base shifting via a focus on many types of outbound deductible payments by a U.S. Corporation that can erode the U.S. tax base. GILTI prevents base shifting of I.P. and BEAT acts as a minimum tax. Taken together, FDII and GILTI work in tandem, discouraging U.S. Multinationals from shifting profits and intellectual property out of the United States and eroding the tax base.
Who Should Attend
Tax Directors, Tax Staff, Transfer Pricing Practitioners, Treasury, Internal Audit, Tax Attorneys, CPAs, and CFOs.
- The basics of TCJA: What are GILTI and BEAT?
- What are the newly defined categories of foreign income to be added to corporate taxable income each year?
- What is Foreign Derived Intangible Income ("FDII"), and how does it relate to GILTI?
- What is the participation exemption?
- What is the OECD's Unified Framework?
- What are "supernormal" returns, or returns above 10 percent of qualified investments?
- What are the "net tested income" and the "Qualified Business Asset Investment" aspects of GILTI?
- What is the "one CFC" approach of GILTI?
- What is the "modified taxable income" of BEAT?
- What are the Effective Dates of the Regulations?
- What are the future scheduled changes and associated impacts of GILTI and BEAT?
- Identify the Tax Planning Impacts of GILTI and BEAT
- Identify the Relationships between TCJA's GILTI and BEAT provisions and the OECD's Unified Framework
- Differentiate between International tax systems: world-wide, territorial and destination-based
- Identify the TCJA shift from a Global Tax to a Territorial One
- Recognize the importance of the TCJA Participation Exemption
- Identify how GILTI and FDII incentivize U.S. Businesses to keep I.P. related profits in the U.S.
- Describe the arc of the fifteen (15) BEPS articles
- Recognize the relationship between TCJA and BEPS Pillar's One and Two
- Identify the new taxing right under Pillar One and its relationship to the destination-based tax framework
- Recognize how BEAT and Pillar Two merge toward a new Global Minimum Tax
- Describe how Pillar One dilutes the Arm's Length Standard and replaces it with Understand how Global Formulary Apportionment is becoming the basis for International Taxation
NASBA Field of Study
Taxes (1 hour)