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TEI, through its Financial Reporting Committee and under the leadership of chair Stephen Dunphy (Silicon Valley Chapter), filed comprehensive comments with the FASB on the financial statement treatment under ASC 740 of the new BEAT (Base Erosion Anti-Abuse Tax) and the GILTI (Global Intangible Low-Taxed Income) tax regimes. The BEAT and GILTI were enacted as part of tax reform legislation signed into law on December 22, 2017.
Tax reform legislation enacted on December 22, 2017, formerly known as the Tax Cuts and Jobs Act (the Act),1 significantly alters the U.S. international tax system and, in doing so, raises a number of significant financial statement disclosure issues that must be addressed in a very compressed timeframe. Tax Executives Institute, Inc. (TEI or the Institute) is providing our members' views on how the disclosure requirements under Accounting Standards Codification, Topic Number 740- Income Taxes ("ASC 740") should be applied to two new regimes that will have widespread impact on U.S. business taxpayers with significant foreign operations, the "Base Erosion Anti-Abuse Tax," provided under new section 59A (the BEAT), and the "Global Intangible Low-Taxed Income" (GILTI) regime, provided under new section 951A.2
We understand the FASB recently met with representatives of the "Big 4" accounting firms to discuss issues arising from the Act, including the BEAT and the GILTI regime. To date, three of the Big 4 firms have published commentary expressing their respective views on how the financial impacts of the BEAT and the GILTI regime should be disclosed in financial statements. The tax and accounting issues at play are complex, and the Big 4 views diverge. We appreciate this opportunity to provide the views of our membership, which is comprised solely of in-house tax and tax accounting professionals who will be charged with evaluating the financial impacts of the Act and preparing associated financial statement disclosures, especially given the divergent views expressed by the Big 4.
TEI Background
TEI is the preeminent association of in-house tax professionals worldwide. Our approximately 7,000 members represent more than 2,800 of the leading corporations in North and South America, Europe, and Asia. TEI represents a cross-section of the business community and is dedicated to developing and effectively implementing sound tax policy, promoting the uniform and equitable enforcement of the...