Bill Details
Status
Latest action
2025-03-06 - Referred to the House Committee on Ways and Means.
Introduced Date
2025-03-06
Policy Area
Taxation
Committees
View committees (1)
Cosponsors
View cosponsors (2)
5
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AI Summary This summary was generated by AI from the bill text. AI can get information wrong.
This bill would change how some payments to foreign related companies are treated for tax purposes. In general, if a U.S. taxpayer pays money to a foreign related party, that payment usually can count against the company under the base erosion tax rules. This bill says those payments would not count as base erosion payments if the taxpayer can show that both the foreign recipient and the payment itself are each subject to at least a 15% effective foreign income tax. The bill also lets the tax rate be shown using a company’s financial statements, with adjustments made under Treasury rules. It directs the Treasury Department to write rules to carry out the change and to prevent tax avoidance or abuse. The change would apply to tax years starting after the bill becomes law.
- Payments to foreign related parties would be excluded from base erosion rules if both the recipient and the payment are taxed at an effective foreign income tax rate of at least 15%.
- The tax rate could generally be proven using applicable financial statements, with adjustments for items such as certain gains or losses, penalties, errors, and other issues set by Treasury.
- The bill defines “foreign income taxes” broadly to include income, war profits, or excess profits taxes paid or owed to a foreign country or U.S. possession.
- Treasury would be required to issue rules on how to calculate the tax rate and how to stop tax avoidance or abusive transactions between related parties.
Official Summaries
No summaries available
Current Full Text
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1911 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 1911
To amend the Internal Revenue Code of 1986 to provide that certain
payments to foreign related parties subject to sufficient foreign tax
are not treated as base erosion payments.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 6, 2025
Mr. Conaway (for himself, Mr. Suozzi, and Mr. Van Drew) 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 provide that certain
payments to foreign related parties subject to sufficient foreign tax
are not treated as base erosion payments.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. CERTAIN PAYMENTS TO FOREIGN RELATED PARTIES SUBJECT TO
SUFFICIENT FOREIGN TAX NOT TREATED AS BASE EROSION
PAYMENTS.
(a) In General.--Section 59A of the Internal Revenue Code of 1986
is amended by redesignating subsection (i) as subsection (j) and by
inserting after subsection (h) the following new subsection:
``(i) Certain Payments to Foreign Related Parties Subject to
Sufficient Foreign Tax Not Treated as Base Erosion Payments.--
``(1) In general.--An amount shall not be treated as a base
erosion payment if the taxpayer establishes to the satisfaction
of the Secretary that--
``(A) the foreign person to whom such amount is
paid or incurred is subject to an effective rate of
foreign income tax of at least 15 percent, and
``(B) such amount is subject to an effective rate
of foreign income tax of at least 15 percent.
``(2) Determination of effective rate on basis of
applicable financial statements.--Except as otherwise provided
by the Secretary, the effective rate of foreign income tax may
be established on the basis of applicable financial statements
(as defined in section 451(b)(3)) with appropriate adjustments
(as determined by the Secretary) for excluded dividends, net
tax expense, excluded equity gain or loss, included revaluation
method gain or loss, gain or loss from intragroup transfers of
assets and liabilities, asymmetric foreign currency gains or
losses, bribes, illegal payments, large penalties, prior period
errors and changes in accounting methods, accrued pension
expenses, and such other items as the Secretary may provide.
``(3) Foreign income tax.--For purposes of this subsection,
the term ``foreign income taxes'' means any income, war
profits, or excess profits taxes paid or accrued to any foreign
country or to any possession of the United States.''.
(b) Regulations.--Section 59A(j) of such Code, as redesignated by
subsection (a), is amended by striking ``and'' at the end of paragraph
(1), by striking the period at the end of paragraph (2) and inserting
``, and'', and by adding at the end the following new paragraph:
``(3) for the application of subsection (i), including--
``(A) procedures for determining the effective rate
of foreign income tax, and
``(B) rules to the prevent tax avoidance or abuse,
including rules for recharacterizing a transaction or
series of transactions among related parties.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
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