Unfair Tax Prevention Act

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2423 Introduced in House (IH)]

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119th CONGRESS
  1st Session
                                H. R. 2423

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.


_______________________________________________________________________


                    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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Unfair Tax Prevention Act''.

SEC. 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.
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