KPMG: Pricing method, services cost method eligibility under U.S. BEAT provision

Originally Published by KPMG.

However, determining the scope of the new BEAT SCM exception can be a complex undertaking. The good news is that mark-ups, commissions, and combined service prices alone do not preclude eligibility for the exception.

The BEAT provisions under section 59A provide an exemption for certain amounts paid or accrued for services that meet (with one exception) the requirements for eligibility for SCM use—the BEAT SCM exception. The section 59A proposed regulations would allow the BEAT SCM exception even if a mark-up is paid, assuming the other applicable requirements for the BEAT SCM exception were satisfied. Much has been written about the availability of the BEAT SCM exception for services that meet the relevant SCM-eligibility requirements but for which the transfer price equals the sum of the total costs of providing the services and a mark-up. This report:

  • Evaluates the availability of the BEAT SCM exception for services for which the price is not explicitly set as total services costs plus a mark-up but takes a different form, such as a commission on sales, and concludes that the service payments can qualify for the BEAT SCM exception. The payment amount that can be excluded from the BEAT will equal the lesser of the actual charge for the qualifying services and the total services cost associated with the services.
  • Discusses certain other considerations related to the pricing method and the BEAT SCM exception—such as whether an aggregate price for SCM eligible and non-SCM eligible services can be disaggregated for purposes of the BEAT exception. Generally, a combined service price can be disaggregated for BEAT exception purposes.


Read an April 2019 report [PDF 110 KB] prepared by KPMG LLP: What’s News in Tax: Pricing Method and SCM-eligibility under the BEAT

Latest News

5 Biggest News Stories of the Week: December 1

As the saying goes, the news never stops — but there’s a lot of it out there, and all of it doesn’t always pertain to our readers. In this weekly news roundup, we’ll cover the top news stories that matter most to our diversity focused audience. 1. Bill to Protect…

Medtronic Increases Remote Access to Innovative Technologies and Training

Originally published at news.medtronic.com. Medtronic ranked No. 10 on The DiversityInc Top 50 Companies for Diversity list in 2022.   Medtronic plc, a global leader in healthcare technology, launched the Medtronic Customer eXperience Center (MCXC) in Singapore, leveraging innovative healthcare technologies across extended reality (XR), augmented and virtual realities and…

PwC on Providing Workplace Skills for Global Youth

Originally published at pwc.com. PwC is a Hall of Fame company.   Take on Tomorrow, the podcast from our management publication strategy+business, brings you Episode 10: “How can we ensure the workers of tomorrow get the skills they need today?” As countries around the world face labor shortages, global youth unemployment…