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Inside the New Foreign-Entity Limits on US Clean-Energy Incentives
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The "prohibited foreign entity" (PFE) test: A taxpayer is ineligible for credits if they are deemed a "prohibited foreign entity."
This is defined as an entity that is both a "specified foreign entity" and a "foreign influenced entity."
The "material assistance" restriction: This rule prohibits claiming credits if a project receives "material assistance" from a PFE.
Investors are underwriting against these thresholds today by requiring supply chain transparency down to the "material assistance cost ratio."
Material assistance: Policies can increasingly cover the factual accuracy of the material assistance calculations.