Renewable energy could face tax problems in Republican compromise

December 19, 2017 by  
Filed under Green

Renewable energy advocates initially breathed a sigh of relief when the Republican tax bill reworked a provision that could have disrupted the industry’s $12 billion tax-equity market, Bloomberg reported . But a closer look reveals the bill includes what the publication described as “hidden pitfalls that could undercut its benefit.” Law firm Stoel Rives partner Greg Jenner told Bloomberg, “If Congress thought they were eliminating the trouble for renewables , they were wrong. It’s a question of how bad it will be.” Many solar and wind developers receive tax credits , and as they typically don’t have a big tax liability, third parties like insurance companies or banks will invest in their projects – basically in exchange for those credits, according to Bloomberg. The anxiety is over the Base Erosion Anti-Abuse Tax (BEAT), a provision intended to close loopholes for companies including insurers and banks that remit money to affiliates overseas. Related: Solar power now provides twice as many jobs as coal in U.S. American Council on Renewable Energy president Greg Wetstone said, “The BEAT program will make it harder to use the tax credits – even though it’s significantly improved from what we were presented with” in the Senate. The compromise would expand which companies face the BEAT tax, according to Bloomberg. And because companies won’t be sure if they are subject to a BEAT tax bill, they might not be willing to do a tax-equity deal with renewable energy developers. The compromise tax bill would let companies offset up to 80 percent of their foreign-transaction tax with renewable energy credits, per Bloomberg, but the 80 percent offset expires in 2025. Separately, there could be less demand for renewable energy tax credits if the overall corporate tax rate is trimmed down to 21 percent, according to Bloomberg. The publication said all these details mean there’s a lot of uncertainty in the $12 billion tax-equity market’s future. Via Bloomberg Images via Depositphotos ( 1 , 2 )

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Renewable energy could face tax problems in Republican compromise


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