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A provision in the new tax law, intended to prevent U.S. companies from shifting profits abroad to benefit from a lower overseas rate, might also hit the largest foreign banks with significant U.S. operations.The law doesn't say whether the payments are counted on a gross or net basis, said Gavin Ekins of the Tax Foundation, a policy group. Because global banks frequently move money among units, a gross basis requirement would amplify their income for the calculation.While the BEAT provision would exaggerate U.S. income for foreign banks, the impact on U.S. firms won't be as significant because most of their income is domestic and would be taxed under the regular corporate rate set by the new law, Ekins said.The Institute of International Bankers, a group lobbying on behalf of foreign banks with U.S. operations, expects BEAT calculations to be made on a gross basis, and urged Congress earlier this month to fix these issues before the law was finalized.
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