Tax Fairness and Transparency Act

Summary: Tax Fairness and Transparency Act  This bill amends the Internal Revenue Code to limit the tax deduction of the interest expense of a U.S. corporation that is a member of a financial reporting group (a group that prepares consolidated financial statements according to accepted accounting principles or international financial reporting standards) to: (1) the amount of interest on indebtedness of the corporation includible in the corporation's gross income for the taxable year plus its proportionate share of the group's net interest expense in the taxable year computed under U.S. income tax principles; or (2) not more than 10% of the corporation's adjusted taxable income, if the corporation fails to substantiate its proportionate share of interest expense or so elects.  The bill exempts from the limitation a corporation that is predominantly engaged in the active conduct of a banking, financing, or similar business or that has less than $5 million of net interest expense for the taxable year.  The bill also modifies the definition of subpart F income (i.e., income of a controlled foreign corporation earned outside the United States that is not tax-deferred) to include income of a controlled foreign corporation derived from any foreign country. This modification is applicable to taxable years beginning after December 31, 2017.  The bill amends the Securities Exchange Act of 1934 to require each issuer of a security who is required to file an annual or quarterly report to disclose specified: (1) details regarding pre-tax profits and taxes paid; and (2) corporate financial information, aggregated on a country-by-country basis, for each of its subsidiaries. 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Tax Fairness and Transparency Act''.

SEC. 2. LIMITATION ON INTEREST DEDUCTION FOR EXCESSIVE INTEREST OF 
              MEMBERS OF FINANCIAL REPORTING GROUPS.

    (a) In General.--Section 163 of the Internal Revenue Code of 1986 
is amended by redesignating subsection (n) as subsection (o) and by 
inserting after subsection (m) the following:
    ``(n) Limitation on Excessive Interest of Members of Financial 
Reporting Groups.--
            ``(1) Limitation.--
                    ``(A) In general.--If this subsection applies to 
                any corporation for any taxable year, no deduction 
                shall be allowed under this chapter for the taxable 
                year for interest expense to the extent that such 
                expense exceeds the sum of--
                            ``(i) the amount of interest on 
                        indebtedness of the corporation includible in 
                        the corporation's gross income for the taxable 
                        year, plus
                            ``(ii) the corporation's proportionate 
                        share of the financial reporting group's net 
                        interest expense for the taxable year computed 
                        under United States income tax principles.
                    ``(B) Proportionate share of net interest 
                expense.--For purposes of subparagraph (A)(ii)--
                            ``(i) In general.--A corporation's 
                        proportionate share of the financial reporting 
                        group's net interest expense means the amount 
                        equal to the percentage of the group's net 
                        interest expense which bears the same 
                        percentage as the corporation's earnings bears 
                        to the group's earnings.
                            ``(ii) Earnings.--For purposes of clause 
                        (i), earnings shall be the sum of net earnings 
                        plus net interest expense, taxes, depreciation, 
                        and amortization.
                            ``(iii) Determinations relating to 
                        earnings.--For purposes of clause (ii), 
                        earnings, net interest expense, taxes, 
                        depreciation, and amortization with respect to 
                        a financial reporting group shall be as 
                        reflected on the financial reporting group's 
                        financial statements for the taxable year 
                        ending in the taxable year of the corporation.
                    ``(C) Alternative determination.--In lieu of the 
                limitation in subparagraph (A), if--
                            ``(i) a corporation fails to substantiate 
                        the corporation's proportionate share of the 
                        financial reporting group's net interest 
                        expense for a taxable year, or
                            ``(ii) a corporation so elects,
                no deduction shall be allowed under this chapter for 
                the taxable year for interest expense to the extent 
                that such expense exceeds 10 percent of the 
                corporation's adjusted taxable income (as defined under 
                subsection (j)(6)(A)).
            ``(2) Corporations to which subsection applies.--
                    ``(A) In general.--This subsection shall apply to 
                any corporation for any taxable year if the corporation 
                is a member of a financial reporting group.
                    ``(B) Certain corporations not included.--This 
                subsection shall not apply to any corporation which--
                            ``(i) is a corporation predominantly 
                        engaged in the active conduct of a banking, 
                        financing, or similar business, or
                            ``(ii) has less than $5,000,000 of net 
                        interest expense for the taxable year.
                    ``(C) Financial reporting group.--For purposes of 
                subparagraph (A), the term `financial reporting group' 
                means a group that prepares consolidated financial 
                statements in accordance with United States generally 
                accepted accounting principles, international financial 
                reporting standards, or other method authorized by the 
                Secretary of the Treasury under regulations. Such term 
                shall not include any corporation described in 
                subparagraph (B)(i).
                    ``(D) Subgroups.--For purposes of this subsection, 
                all members of an expanded affiliated group (as defined 
                in section 7874(c)(1)) shall be treated as 1 
                corporation.
            ``(3) Net interest expense.--The term `net interest 
        expense' has the meaning given such term by subsection 
        (j)(6)(B).
            ``(4) Carryforward.--
                    ``(A) Disallowed interest.--Any amount disallowed 
                under subparagraph (A) or (C) for any taxable year 
                shall be treated as an interest expense in the next 
                taxable year, and such amount shall not be taken into 
                account for purposes of applying subsection 
                (j)(2)(A)(ii) for such taxable year.
                    ``(B) Excess limitation.--The excess (if any) of 
                the sum determined under paragraph (1)(A) (i) and (ii) 
                for a taxable year over the amount of interest expense 
                deducted under this subsection for the taxable year 
                shall be added to the limitation determined under 
                paragraph (1) for the next taxable year (determined 
                without regard to this subparagraph). No excess 
                limitation may be carried to more than 3 taxable years.
            ``(5) Election.--The election under paragraph (1)(C)(ii) 
        shall be made at such time and in such manner as the Secretary 
        may prescribe by regulations.
            ``(6) Regulations.--The Secretary shall prescribe such 
        regulations and other guidance as may be necessary to carry out 
        the purposes of this subsection, including regulations to--
                    ``(A) coordinate the application of this subsection 
                with other interest deductibility rules,
                    ``(B) define financial services entities,
                    ``(C) permit financial reporting groups to compute 
                the group's non-United States net interest expense 
                without making certain adjustments required under 
                United States income tax principles,
                    ``(D) provide for the treatment of pass-through 
                entities, and
                    ``(E) allow the use of financial statements 
                prepared under other countries' generally accepted 
                accounting principles in appropriate circumstances 
                where a financial reporting group does not prepare 
                financial statements under United States generally 
                accepted accounting principles or international 
                financial reporting standards.''.
    (b) Coordination With 163(j).--Section 163(j)(2)(A) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following 
flush sentence: ``This subsection shall not apply to any corporation 
which is a member of a financial reporting group to which subsection 
(n) applies.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2017.

SEC. 3. TERMINATION OF DEFERRAL OF ACTIVE INCOME OF CONTROLLED FOREIGN 
              CORPORATIONS.

    (a) In General.--Section 952 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(e) Special Application of Subpart.--
            ``(1) In general.--For taxable years beginning after 
        December 31, 2017, notwithstanding any other provision of this 
        subpart, the term `subpart F income' means, in the case of any 
        controlled foreign corporation, the income of such corporation 
        derived from any foreign country.
            ``(2) Applicable rules.--Rules similar to the rules under 
        the last sentence of subsection (a) and subsection (d) shall 
        apply to this subsection.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2017.

SEC. 4. REQUIREMENT TO DISCLOSE TOTAL CORPORATE TAXES PAID.

    (a) In General.--Section 13 of the Securities Exchange Act of 1934 
(15 U.S.C. 78m) is amended by adding at the end the following new 
subsection:
    ``(s) Disclosure of Total Corporate Taxes Paid.--
            ``(1) Issuer disclosure requirement.--Each issuer required 
        to file an annual or quarterly report under subsection (a) 
        shall disclose in that report--
                    ``(A) the total pre-tax profit of the issuer during 
                the period covered by the report;
                    ``(B) the total amount paid by the issuer in State 
                taxes during the period covered by the report;
                    ``(C) the total amount paid by the issuer in 
                Federal taxes during the period covered by the report; 
                and
                    ``(D) the total amount paid by the issuer in 
                foreign taxes during the period covered by the report.
            ``(2) Disclosure of country-by-country reporting 
        information.--Each issuer required to file an annual or 
        quarterly report under subsection (a) shall disclose in that 
        report, for each of its subsidiaries and aggregated on a 
        country-by-country basis--
                    ``(A) revenues generated from transactions with 
                other constituent entities;
                    ``(B) revenues not generated from transactions with 
                other constituent entities;
                    ``(C) profit or loss before income tax;
                    ``(D) total income tax paid on a cash basis to all 
                tax jurisdictions, and any taxes withheld on payments 
                received by the constituent entities;
                    ``(E) total accrued tax expense recorded on taxable 
                profits or losses, reflecting only operations in the 
                relevant annual period and excluding deferred taxes or 
                provisions for uncertain tax liabilities;
                    ``(F) stated capital, except that the stated 
                capital of a permanent establishment must be reported 
                in the tax jurisdiction of residence of the legal 
                entity of which it is a permanent establishment unless 
                there is a defined capital requirement in the permanent 
                establishment tax jurisdiction for regulatory purposes;
                    ``(G) total accumulated earnings, except that 
                accumulated earnings of a permanent establishment must 
                be reported by the legal entity of which it is a 
                permanent establishment;
                    ``(H) total number of employees on a full-time 
                equivalent basis; and
                    ``(I) net book value of tangible assets, which, for 
                purposes of this section, does not include cash or cash 
                equivalents, intangibles, or financial assets.
            ``(3) Availability of information.--The Commission shall 
        make the information filed with the Commission pursuant to this 
        subsection publicly available through the Commission website in 
        a manner that is searchable, sortable, and downloadable.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to disclosures made after the date of the enactment of this Act.