H.R. 2423

119 HR 2423 IH: Unfair Tax Prevention Act
 U.S. House of Representatives
 2025-03-27
 text/xml
 EN
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 I  119th CONGRESS  1st Session  H. R. 2423  IN THE HOUSE OF REPRESENTATIVES   March 27, 2025   Mr. Estes  (for himself,  Mr. Buchanan ,  Mr. Smith of Nebraska ,  Mr. Kelly of Pennsylvania ,  Mr. Schweikert ,  Mr. LaHood ,  Mr. Arrington ,  Mr. Smucker ,  Mr. Hern of Oklahoma ,  Mrs. Miller of West Virginia ,  Mr. Murphy ,  Mr. Kustoff ,  Mr. Fitzpatrick ,  Mr. Steube ,  Ms. Tenney ,  Mrs. Fischbach ,  Mr. Moore of Utah ,  Ms. Van Duyne ,  Mr. Feenstra ,  Ms. Malliotakis ,  Mr. Carey ,  Mr. Yakym ,  Mr. Miller of Ohio ,  Mr. Bean of Florida , and  Mr. Moran ) introduced the following bill; which was referred to the  Committee on Ways and Means    A BILL
To amend the Internal Revenue Code of 1986 to modify the application of the base erosion and anti-abuse tax with respect to certain entities connected to jurisdictions which have implemented an extraterritorial tax.
1.
Short title
This Act may be cited as the   Unfair Tax Prevention Act  .
2.
Application of the base erosion and anti-abuse tax with respect to certain entities connected to extraterritorial tax jurisdictions
(a)
In general
 Section 59A  of the Internal Revenue Code of 1986 is amended by redesignating subsection (i) as subsection (j) and inserting after subsection (h) the following new subsection:
(i)
Special rules for foreign-Owned extraterritorial tax regime entities
(1)
In general
In the case of any foreign-owned extraterritorial tax regime entity—
(A)
such entity shall be treated as described in subparagraphs (B) and (C) of subsection (e)(1) for purposes of determining whether such entity is an applicable taxpayer,
(B)
subsection (b)(2) shall be applied by substituting  the date of the enactment of subsection (i)  for  December 31, 2025 ,
(C)
subsections (c)(2)(B), (c)(4)(B)(ii), and (d)(5) shall not apply, and
(D)
50 percent of such entity’s cost of goods sold shall be treated as a base erosion tax benefit with respect to a base erosion payment.
(2)
Foreign-owned extraterritorial tax regime entity
For purposes of this subsection—
(A)
In general
The term ‘foreign-owned extraterritorial tax regime entity’ means any taxpayer which is controlled by a foreign entity (other than a foreign entity controlled by any domestic corporation) if an extraterritorial tax is imposed on any of the following entities:
(i)
Any foreign entity which controls the taxpayer.
(ii)
Any foreign entity which is controlled by—
(I)
the taxpayer, or
(II)
any foreign entity described in clause (i).
(iii)
Any trade or business of any foreign entity described in clause (i) or (ii).
(B)
Extraterritorial tax
(i)
In general
The term  extraterritorial tax  means any tax imposed by a foreign country on a corporation (including any trade or business of such corporation) which is determined by reference to any income or profits received by any person (including any trade or business of any person) by reason of such person being connected to such corporation through any chain of ownership, determined without regard to the ownership interests of any individual, and other than by reason of such corporation having a direct or indirect ownership interest in such person.
(ii)
Tax
The term  tax  includes any increase in tax whether effectuated by an increase in the rate or base of a tax, by a denial of deductions or credits, or otherwise.
(C)
Foreign entity
The term  foreign entity  means any foreign person other than an individual.
(D)
Control
Control has the same meaning given such term under section 954(d)(3).
 .
(b)
Effective date
The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.