Large companies can now count some foreign payments as derivatives, not taxable income

The US Treasury Department changed how certain large companies calculate a tax on payments to foreign partners. This means some payments that used to be taxed as 'base erosion' can now be treated as 'qualified derivative payments,' which are exempt.

This rule change makes it easier for large US corporations to avoid a specific tax on payments to their foreign affiliates. The tax, called the Base Erosion and Anti-Abuse Tax (BEAT), was designed to stop companies from shifting profits out of the US to lower-tax jurisdictions. Now, a specific type of payment related to securities lending can be reclassified, potentially reducing the tax burden for some companies.