disregarded if tax withheld on base erosion payment (i) In general Except as provided in clause (ii), any base erosion tax benefit attributable to any base erosion payment— (I) on which tax is imposed by section 871 or 881, and (II) with respect to which tax has been deducted and withheld under section 1441 or 1442, shall not be taken into account in computing modified taxable income under paragraph (1)(A) or the base erosion percentage under paragraph (4). (ii) Exception The amount not taken into account in computing modified taxable income by reason of clause (i) shall be reduced under rules similar to the rules under section 163(j)(5)(B) (as in effect before the date of the enactment of the Tax Cuts and Jobs Act ). (3) Special rules for determining interest for which deduction allowed For purposes of applying paragraph (1), in the case of a taxpayer to which subsection (j) or (n) of section 163 applies for the taxable year, the reduction in the amount of interest for which a deduction is allowed by reason of such subsection shall be treated as allocable first to interest paid or accrued to persons who are not related parties with respect to the taxpayer and then to such related parties. (4) Base erosion percentage For purposes of paragraph (1)(B)— (A) In general The term base erosion percentage means, for any taxable year, the percentage determined by dividing— (i) the aggregate amount of base erosion tax benefits of the taxpayer for the taxable year, by (ii) the aggregate amount of the deductions allowable to the taxpayer under this chapter for the taxable year. (B) Special rules The amount under subparagraph (A)(ii) shall be determined— (i) by taking into account base erosion tax benefits described in clauses (i) and (ii) of paragraph (2)(A), and (ii) by not taking into account any deduction allowed under section 172, 245A, or 250 for the taxable year. (d) Base erosion payment For purposes of this section— (1) In general The term base erosion payment means any amount paid or accrued by the taxpayer to a