II 

118TH CONGRESS 

2D SESSION S. 4098 

To amend the Internal Revenue Code of 1986 to modify the treatment 

of foreign corporations, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

APRIL 10, 2024 

Mr. SANDERS introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to modify 

the treatment of foreign corporations, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Corporate Tax Dodg5 ing Prevention Act’’. 

6 SEC. 2. RESTORATION OF PROGRESSIVE CORPORATE TAX 

7 RATE. 

8 (a) IN GENERAL.—Section 11(b) of the Internal Rev9 enue Code of 1986 is amended to read as follows: 

10 ‘‘(b) AMOUNT OF TAX.— 


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1 ‘‘(1) IN GENERAL.—The amount of the tax im2 posed by subsection (a) shall be the sum of— 

3 ‘‘(A) 15 percent of so much of the taxable 

4 income as does not exceed $50,000, 

5 ‘‘(B) 25 percent of so much of the taxable 

6 income as exceeds $50,000 but does not exceed 

7 $75,000, 

8 ‘‘(C) 34 percent of so much of the taxable 

9 income as exceeds $75,000 but does not exceed 

10 $10,000,000, and 

11 ‘‘(D) 35 percent of so much of the taxable 

12 income as exceeds $10,000,000. 

13 In the case of a corporation which has taxable in14 come in excess of $100,000 for any taxable year, the 

15 amount of tax determined under the preceding sen16 tence for such taxable year shall be increased by the 

17 lesser of (i) 5 percent of such excess, or (ii) $11,750. 

18 In the case of a corporation which has taxable in19 come in excess of $15,000,000, the amount of the 

20 tax determined under the foregoing provisions of 

21 this paragraph shall be increased by an additional 

22 amount equal to the lesser of (i) 3 percent of such 

23 excess, or (ii) $100,000. 

24 ‘‘(2) CERTAIN PERSONAL SERVICE CORPORA25 TIONS NOT ELIGIBLE FOR GRADUATED RATES.— 


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1 Notwithstanding paragraph (1), the amount of the 

2 tax imposed by subsection (a) on the taxable income 

3 of a qualified personal service corporation (as de4 fined in section 448(d)(2)) shall be equal to 35 per5 cent of the taxable income.’’. 

6 (b) EFFECTIVE DATE.—The amendment made by 

7 this section shall apply to taxable years beginning after 

8 December 31, 2024. 

9 SEC. 3. EQUALIZATION OF TAX RATES ON DOMESTIC AND 

10 FOREIGN INCOME. 

11 (a) IN GENERAL.—Section 952 of the Internal Rev12 enue Code of 1986 is amended by adding at the end the 

13 following new subsection: 

14 ‘‘(e) SPECIAL APPLICATION OF SUBPART.— 

15 ‘‘(1) IN GENERAL.—For taxable years begin16 ning after December 31, 2024, notwithstanding any 

17 other provision of this subpart, the term ‘subpart F 

18 income’ means, in the case of any controlled foreign 

19 corporation, the income of such corporation derived 

20 from any foreign country. 

21 ‘‘(2) APPLICABLE RULES.—Rules similar to the 

22 rules under the last sentence of subsection (a) and 

23 subsection (d) shall apply to this subsection.’’. 

24 (b) TREATMENT OF PREVIOUSLY DEFERRED FOR25 EIGN INCOME.— 


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1 (1) TREATMENT OF INTEREST.—Section 965(h) 

2 of the Internal Revenue Code of 1986 is amended by 

3 adding at the end the following new paragraph: 

4 ‘‘(7) RULES RELATING TO INTEREST.—In the 

5 case of any amount of the net tax liability prorated 

6 to an installment under this subsection which has 

7 not been paid before the date of the enactment of 

8 this paragraph, the last date prescribed for payment 

9 of any such installment for purposes of section 6601 

10 shall be the earlier of such last date (determined 

11 without regard to this paragraph) or such date of 

12 enactment.’’. 

13 (2) RULES FOR S CORPORATIONS.—Section 

14 965(i)(2)(A) of such Code is amended by adding at 

15 the end the following new clause: 

16 ‘‘(iv) The date of the enactment of the 

17 Corporate Tax Dodging Prevention Act.’’. 

18 (c) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply to taxable years of foreign corpora20 tions beginning after December 31, 2024, and to taxable 

21 years of United States shareholders in which or with which 

22 such taxable years of foreign corporations end. 


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1 SEC. 4. COUNTRY-BY-COUNTRY APPLICATION OF LIMITA2 TION ON FOREIGN TAX CREDIT BASED ON 

3 TAXABLE UNITS. 

4 (a) IN GENERAL.—Section 904 is amended by insert5 ing after subsection (d) the following new subsection: 

6 ‘‘(e) COUNTRY-BY-COUNTRY APPLICATION OF SEC7 TION BASED ON TAXABLE UNITS.— 

8 ‘‘(1) IN GENERAL.—The provisions of sub9 sections (a), (b), (c), and (d) and sections 907 and 

10 960 shall be applied separately with respect to each 

11 country and possession by taking into account the 

12 aggregate items properly attributable or otherwise 

13 allocable to a taxable unit of the taxpayer which is 

14 a tax resident of such country or possession. 

15 ‘‘(2) TAXABLE UNITS.— 

16 ‘‘(A) IN GENERAL.—Unless otherwise pro17 vided by the Secretary, to the extent an item 

18 may be properly attributable or otherwise allo19 cable to more than one taxable unit under para20 graph (1), such item shall be treated as prop21 erly attributable or otherwise allocable to the 

22 lowest-tier taxable unit of the taxpayer to which 

23 such item may be properly attributable or oth24 erwise allocable. No item shall be attributable 

25 or otherwise allocable to more than one taxable 

26 unit of the taxpayer. 


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1 ‘‘(B) DETERMINATION OF TAXABLE

2 UNITS.—Except as otherwise provided by the 

3 Secretary, the taxable units of a taxpayer are 

4 as follows: 

5 ‘‘(i) IN GENERAL.—The general tax6 able unit of the taxpayer which is not oth7 erwise described in a separate clause of 

8 this subparagraph. 

9 ‘‘(ii) FOREIGN BRANCHES.—Each for10 eign branch the activities of which are car11 ried on directly or indirectly (through one 

12 or more pass-through entities) by the tax13 payer. 

14 ‘‘(iii) CONTROLLED FOREIGN COR15 PORATIONS.—Each controlled foreign cor16 poration with respect to which the tax17 payer is a United States shareholder. 

18 ‘‘(iv) BRANCHES OF CONTROLLED

19 FOREIGN CORPORATIONS.—Each branch 

20 the activities of which are carried on di21 rectly or indirectly (through one or more 

22 pass-through entities) by a controlled for23 eign corporation referred to in clause (iii). 

24 ‘‘(v) INTERESTS IN PASS-THROUGH

25 ENTITIES.— 


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1 ‘‘(I) IN GENERAL.—Each interest 

2 in a pass-through entity held directly 

3 or indirectly by the taxpayer or a con4 trolled foreign corporation referred to 

5 in clause (iii) if such entity is a tax 

6 resident of a foreign country. 

7 ‘‘(II) CERTAIN INTERESTS HELD

8 BY CONTROLLED FOREIGN CORPORA9 TIONS.—Each interest in a pass10 through entity held directly or indi11 rectly by a controlled foreign corpora12 tion referred to in clause (iii) if such 

13 entity is a tax resident of a foreign 

14 country or such entity is treated as a 

15 corporation (or other entity that is 

16 not fiscally transparent) for purposes 

17 of the tax law of a foreign country in 

18 which such controlled foreign corpora19 tion is a tax resident. 

20 ‘‘(3) TAX RESIDENT.—For purposes of this 

21 subsection, a taxable unit shall be treated as a tax 

22 resident of a country or possession if such taxable 

23 unit is liable to tax under the tax law of such coun24 try or possession as a resident. 


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1 ‘‘(4) PASS-THROUGH ENTITY.—For purposes of 

2 this subsection, the term ‘pass-through entity’ means 

3 any partnership and any other type of entity (other 

4 than a corporation) identified by the Secretary as a 

5 pass-through entity for purposes of this subsection. 

6 ‘‘(5) REGULATIONS.—The Secretary shall issue 

7 such regulations or other guidance as the Secretary 

8 determines necessary or appropriate to carry out the 

9 purposes of this subsection, including regulations or 

10 other guidance— 

11 ‘‘(A) for determining the country or pos12 session with respect to which any taxable unit 

13 is a tax resident, including— 

14 ‘‘(i) determining such country or pos15 session on the basis of location if such tax16 able unit would not otherwise be a tax resi17 dent of any country or possession, and 

18 ‘‘(ii) ensuring that such taxable unit 

19 is a tax resident of not more than 1 coun20 try or possession, 

21 ‘‘(B) applying this section to hybrid enti22 ties, passive foreign investment companies, 

23 tiered structures, and branches, including 

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1 ence under the tax law of the country where the 

2 branch is located, and 

3 ‘‘(C) determining whether any entity is not 

4 fiscally transparent within the meaning of para5 graph (2)(B)(v)(II).’’. 

6 (b) APPLICATION OF FOREIGN TAX CREDIT LIMITA7 TION WITH RESPECT TO FOREIGN BRANCHES.—Section 

8 904(d)(2)(J)(i) is amended— 

9 (1) by striking ‘‘qualified business units (as de10 fined in section 989(a)) in 1 or more foreign coun11 tries’’ and inserting ‘‘foreign branches described in 

12 section 904(e)(2)(B)(ii)’’, and 

13 (2) by striking ‘‘a qualified business unit’’ and 

14 inserting ‘‘a foreign branch’’. 

15 (c) EFFECTIVE DATE.—The amendments made by 

16 this section shall apply to taxable years beginning after 

17 December 31, 2024. 

18 SEC. 5. REPEAL OF CHECK-THE-BOX RULES FOR CERTAIN 

19 FOREIGN ENTITIES AND CFC LOOK-THRU 

20 RULES. 

21 (a) CHECK-THE-BOX RULES.—Paragraph (3) of sec22 tion 7701(a) of the Internal Revenue Code of 1986 is 

23 amended— 

24 (1) by striking ‘‘and’’, and 


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1 (2) by inserting after ‘‘insurance companies’’ 

2 the following: ‘‘, and any foreign business entity that 

3 has one or more owners all of which have limited li4 ability.’’. 

5 (b) LOOK-THRU RULE.—Subparagraph (C) of sec6 tion 954(c)(6) of such Code is amended to read as follows: 

7 ‘‘(C) TERMINATION.—Subparagraph (A) 

8 shall not apply to dividends, interest, rents, and 

9 royalties received or accrued after the date of 

10 the enactment of the Corporate Tax Dodging 

11 Prevention Act.’’. 

12 (c) EFFECTIVE DATE.—The amendments made by 

13 this section shall take effect on the date of the enactment 

14 of this Act. 

15 SEC. 6. LIMITATION ON DEDUCTION OF INTEREST BY DO16 MESTIC CORPORATIONS WHICH ARE MEM17 BERS OF AN INTERNATIONAL FINANCIAL RE18 PORTING GROUP. 

19 (a) IN GENERAL.—Section 163 of the Internal Rev20 enue Code of 1986 is amended by redesignating subsection 

21 (n) as subsection (o) and by inserting after subsection (m) 

22 the following new subsection: 

23 ‘‘(n) LIMITATION ON DEDUCTION OF INTEREST BY

24 DOMESTIC CORPORATIONS IN INTERNATIONAL FINAN25 CIAL REPORTING GROUPS.— 


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1 ‘‘(1) IN GENERAL.—In the case of any domestic 

2 corporation which is a member of any international 

3 financial reporting group, the deduction under this 

4 chapter for interest paid or accrued during the tax5 able year shall not exceed the sum of— 

6 ‘‘(A) the allowable percentage of 105 per7 cent of the excess (if any) of— 

8 ‘‘(i) the amount of such interest so 

9 paid or accrued, over 

10 ‘‘(ii) the amount described in subpara11 graph (B), plus 

12 ‘‘(B) the amount of interest includible in 

13 gross income of such corporation for such tax14 able year. 

15 ‘‘(2) INTERNATIONAL FINANCIAL REPORTING

16 GROUP.— 

17 ‘‘(A) For purposes of this subsection, the 

18 term ‘international financial reporting group’ 

19 means, with respect to any reporting year, any 

20 group of entities which— 

21 ‘‘(i) includes— 

22 ‘‘(I) at least one foreign corpora23 tion engaged in a trade or business 

24 within the United States, or 


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1 ‘‘(II) at least one domestic cor2 poration and one foreign corporation, 

3 ‘‘(ii) prepares consolidated financial 

4 statements with respect to such year, and 

5 ‘‘(iii) reports in such statements aver6 age annual gross receipts (determined in 

7 the aggregate with respect to all entities 

8 which are part of such group) for the 3-re9 porting-year period ending with such re10 porting year in excess of $25,000,000. 

11 ‘‘(B) RULES RELATING TO DETERMINA12 TION OF AVERAGE GROSS RECEIPTS.—For pur13 poses of subparagraph (A)(iii), rules similar to 

14 the rules of section 448(c)(3) shall apply. 

15 ‘‘(3) ALLOWABLE PERCENTAGE.—For purposes 

16 of this subsection— 

17 ‘‘(A) IN GENERAL.—The term ‘allowable 

18 percentage’ means, with respect to any domestic 

19 corporation for any taxable year, the ratio (ex20 pressed as a percentage and not greater than 

21 100 percent) of— 

22 ‘‘(i) such corporation’s allocable share 

23 of the international financial reporting 

24 group’s reported net interest expense for 

25 the reporting year of such group which 


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1 ends in or with such taxable year of such 

2 corporation, over 

3 ‘‘(ii) such corporation’s reported net 

4 interest expense for such reporting year of 

5 such group. 

6 ‘‘(B) REPORTED NET INTEREST EX7 PENSE.—The term ‘reported net interest ex8 pense’ means— 

9 ‘‘(i) with respect to any international 

10 financial reporting group for any reporting 

11 year, the excess of— 

12 ‘‘(I) the aggregate amount of in13 terest expense reported in such 

14 group’s consolidated financial state15 ments for such taxable year, over 

16 ‘‘(II) the aggregate amount of in17 terest income reported in such group’s 

18 consolidated financial statements for 

19 such taxable year, and 

20 ‘‘(ii) with respect to any domestic cor21 poration for any reporting year, the excess 

22 of— 

23 ‘‘(I) the amount of interest ex24 pense of such corporation reported in 

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1 national financial reporting group 

2 which are used in preparing such 

3 group’s consolidated financial state4 ments for such taxable year, over 

5 ‘‘(II) the amount of interest in6 come of such corporation reported in 

7 such books and records. 

8 ‘‘(C) ALLOCABLE SHARE OF REPORTED

9 NET INTEREST EXPENSE.—With respect to any 

10 domestic corporation which is a member of any 

11 international financial reporting group, such 

12 corporation’s allocable share of such group’s re13 ported net interest expense for any reporting 

14 year is the portion of such expense which bears 

15 the same ratio to such expense as— 

16 ‘‘(i) the EBITDA of such corporation 

17 for such reporting year, bears to 

18 ‘‘(ii) the EBITDA of such group for 

19 such reporting year. 

20 ‘‘(D) EBITDA.— 

21 ‘‘(i) IN GENERAL.—The term 

22 ‘EBITDA’ means, with respect to any re23 porting year, earnings before interest, 

24 taxes, depreciation, and amortization— 


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1 ‘‘(I) as determined in the inter2 national financial reporting group’s 

3 consolidated financial statements for 

4 such year, or 

5 ‘‘(II) for purposes of subpara6 graph (A)(i), as determined in the 

7 books and records of the international 

8 financial reporting group which are 

9 used in preparing such statements if 

10 not determined in such statements. 

11 ‘‘(ii) TREATMENT OF DISREGARDED

12 ENTITIES.—The EBITDA of any domestic 

13 corporation shall not fail to include the 

14 EBITDA of any entity which is dis15 regarded for purposes of this chapter. 

16 ‘‘(iii) TREATMENT OF INTRA-GROUP

17 DISTRIBUTIONS.—The EBITDA of any do18 mestic corporation shall be determined 

19 without regard to any distribution received 

20 by such corporation from any other mem21 ber of the international financial reporting 

22 group. 

23 ‘‘(E) SPECIAL RULES FOR NON-POSITIVE

24 EBITDA.— 


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1 ‘‘(i) NON-POSITIVE GROUP EBITDA.— 

2 In the case of any international financial 

3 reporting group the EBITDA of which is 

4 zero or less, paragraph (1) shall not apply 

5 to any member of such group the EBITDA 

6 of which is above zero. 

7 ‘‘(ii) NON-POSITIVE ENTITY

8 EBITDA.—In the case of any group mem9 ber the EBITDA of which is zero or less, 

10 paragraph (1) shall be applied without re11 gard to subparagraph (A) thereof. 

12 ‘‘(4) CONSOLIDATED FINANCIAL STATEMENT.— 

13 For purposes of this subsection, the term ‘consoli14 dated financial statement’ means any consolidated 

15 financial statement described in paragraph (2)(A)(ii) 

16 if such statement is— 

17 ‘‘(A) a financial statement which is cer18 tified as being prepared in accordance with gen19 erally accepted accounting principles, inter20 national financial reporting standards, or any 

21 other comparable method of accounting identi22 fied by the Secretary, and which is— 

23 ‘‘(i) a 10–K (or successor form) or 

24 annual statement to shareholders required 


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1 to be filed with the United States Securi2 ties and Exchange Commission, 

3 ‘‘(ii) an audited financial statement 

4 which is used for— 

5 ‘‘(I) credit purposes, 

6 ‘‘(II) reporting to shareholders, 

7 partners, or other proprietors, or to 

8 beneficiaries, or 

9 ‘‘(III) any other substantial 

10 nontax purpose, 

11 but only if there is no statement described 

12 in clause (i), or 

13 ‘‘(iii) filed with any other Federal or 

14 State agency for nontax purposes, but only 

15 if there is no statement described in clause 

16 (i) or (ii), or 

17 ‘‘(B) a financial statement which— 

18 ‘‘(i) is used for a purpose described in 

19 subclause (I), (II), or (III) of subpara20 graph (A)(ii), or 

21 ‘‘(ii) filed with any regulatory or gov22 ernmental body (whether domestic or for23 eign) specified by the Secretary, 

24 but only if there is no statement described in 

25 subparagraph (A). 


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1 ‘‘(5) REPORTING YEAR.—For purposes of this 

2 subsection, the term ‘reporting year’ means, with re3 spect to any international financial reporting group, 

4 the year with respect to which the consolidated fi5 nancial statements are prepared. 

6 ‘‘(6) APPLICATION TO CERTAIN ENTITIES.— 

7 ‘‘(A) PARTNERSHIPS.—The secretary shall 

8 prescribe rules for application of this subsection 

9 to any partnership which is a member of any 

10 international financial reporting group. Such 

11 rules shall treat any such partnership in a man12 ner similar to the way such partnership would 

13 be treated under this subsection if it were a do14 mestic corporation which is a member of any 

15 international financial reporting group. 

16 ‘‘(B) FOREIGN CORPORATIONS ENGAGED

17 IN TRADE OR BUSINESS WITHIN THE UNITED

18 STATES.—Except as otherwise provided by the 

19 Secretary in paragraph (7), any deduction for 

20 interest paid or accrued by a foreign corpora21 tion engaged in a trade or business within the 

22 United States shall be limited in a manner con23 sistent with the principles of this subsection. 

24 ‘‘(C) CONSOLIDATED GROUPS.—For pur25 poses of this subsection, the members of any 


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1 group that file (or are required to file) a con2 solidated return with respect to the tax imposed 

3 by chapter 1 for a taxable year shall be treated 

4 as a single corporation. 

5 ‘‘(7) REGULATIONS.—The Secretary may issue 

6 such regulations or other guidance as are necessary 

7 or appropriate to carry out the purposes of this sub8 section.’’. 

9 (b) EFFECTIVE DATE.—The amendments made by 

10 this section shall apply to taxable years beginning after 

11 the date of the enactment of this Act. 

12 SEC. 7. MODIFICATIONS TO RULES RELATING TO IN13 VERTED CORPORATIONS. 

14 (a) IN GENERAL.—Subsection (b) of section 7874 of 

15 the Internal Revenue Code of 1986 is amended to read 

16 as follows: 

17 ‘‘(b) INVERTED CORPORATIONS TREATED AS DO18 MESTIC CORPORATIONS.— 

19 ‘‘(1) IN GENERAL.—Notwithstanding section 

20 7701(a)(4), a foreign corporation shall be treated for 

21 purposes of this title as a domestic corporation if— 

22 ‘‘(A) such corporation would be a surro23 gate foreign corporation if subsection (a)(2) 

24 were applied by substituting ‘80 percent’ for 

25 ‘60 percent’, or 


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1 ‘‘(B) such corporation is an inverted do2 mestic corporation. 

3 ‘‘(2) INVERTED DOMESTIC CORPORATION.—For 

4 purposes of this subsection, a foreign corporation 

5 shall be treated as an inverted domestic corporation 

6 if, pursuant to a plan (or a series of related trans7 actions)— 

8 ‘‘(A) the entity completes after May 8, 

9 2014, the direct or indirect acquisition of— 

10 ‘‘(i) substantially all of the properties 

11 held directly or indirectly by a domestic 

12 corporation, or 

13 ‘‘(ii) substantially all of the assets of, 

14 or substantially all of the properties consti15 tuting a trade or business of, a domestic 

16 partnership, and 

17 ‘‘(B) after the acquisition, more than 50 

18 percent of the stock (by vote or value) of the 

19 entity is held— 

20 ‘‘(i) in the case of an acquisition with 

21 respect to a domestic corporation, by 

22 former shareholders of the domestic cor23 poration by reason of holding stock in the 

24 domestic corporation, or 


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1 ‘‘(ii) in the case of an acquisition with 

2 respect to a domestic partnership, by 

3 former partners of the domestic partner4 ship by reason of holding a capital or prof5 its interest in the domestic partnership. 

6 ‘‘(3) EXCEPTION FOR CORPORATIONS WITH

7 SUBSTANTIAL BUSINESS ACTIVITIES IN FOREIGN

8 COUNTRY OF ORGANIZATION.—A foreign corporation 

9 described in paragraph (2) shall not be treated as an 

10 inverted domestic corporation if after the acquisition 

11 the expanded affiliated group which includes the en12 tity has substantial business activities in the foreign 

13 country in which or under the law of which the enti14 ty is created or organized when compared to the 

15 total business activities of such expanded affiliated 

16 group. For purposes of subsection (a)(2)(B)(iii) and 

17 the preceding sentence, the term ‘substantial busi18 ness activities’ shall have the meaning given such 

19 term under regulations in effect on May 8, 2014, ex20 cept that the Secretary may issue regulations in21 creasing the threshold percent in any of the tests 

22 under such regulations for determining if business 

23 activities constitute substantial business activities for 

24 purposes of this paragraph.’’. 

25 (b) CONFORMING AMENDMENTS.— 


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1 (1) Clause (i) of section 7874(a)(2)(B) of the 

2 Internal Revenue Code of 1986 is amended by strik3 ing ‘‘after March 4, 2003,’’ and inserting ‘‘after 

4 March 4, 2003, and before May 9, 2014,’’. 

5 (2) Subsection (c) of section 7874 of such Code 

6 is amended— 

7 (A) in paragraph (2)— 

8 (i) by striking ‘‘subsection 

9 (a)(2)(B)(ii)’’ and inserting ‘‘subsections 

10 (a)(2)(B)(ii) and (b)(2)(B)’’, and 

11 (ii) by inserting ‘‘or (b)(2)(A)’’ after 

12 ‘‘(a)(2)(B)(i)’’ in subparagraph (B), 

13 (B) in paragraph (3), by inserting ‘‘or 

14 (b)(2)(B), as the case may be,’’ after 

15 ‘‘(a)(2)(B)(ii)’’, 

16 (C) in paragraph (5), by striking ‘‘sub17 section (a)(2)(B)(ii)’’ and inserting ‘‘sub18 sections (a)(2)(B)(ii) and (b)(2)(B)’’, and 

19 (D) in paragraph (6), by inserting ‘‘or in20 verted domestic corporation, as the case may 

21 be,’’ after ‘‘surrogate foreign corporation’’. 

22 (c) EFFECTIVE DATE.—The amendments made by 

23 this section shall apply to taxable years ending after May 

24 8, 2014. 


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1 SEC. 8. TREATMENT OF FOREIGN CORPORATIONS MAN2 AGED AND CONTROLLED IN THE UNITED 

3 STATES AS DOMESTIC CORPORATIONS. 

4 (a) IN GENERAL.—Section 7701 of the Internal Rev5 enue Code of 1986 is amended by redesignating subsection 

6 (p) as subsection (q) and by inserting after subsection (o) 

7 the following new subsection: 

8 ‘‘(p) CERTAIN CORPORATIONS MANAGED AND CON9 TROLLED IN THE UNITED STATES TREATED AS DOMES10 TIC FOR INCOME TAX.— 

11 ‘‘(1) IN GENERAL.—Notwithstanding subsection 

12 (a)(4), in the case of a corporation described in 

13 paragraph (2) if— 

14 ‘‘(A) the corporation would not otherwise 

15 be treated as a domestic corporation for pur16 poses of this title, but 

17 ‘‘(B) the management and control of the 

18 corporation occurs, directly or indirectly, pri19 marily within the United States, 

20 then, solely for purposes of chapter 1 (and any other 

21 provision of this title relating to chapter 1), the cor22 poration shall be treated as a domestic corporation. 

23 ‘‘(2) CORPORATION DESCRIBED.— 

24 ‘‘(A) IN GENERAL.—A corporation is de25 scribed in this paragraph if— 


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1 ‘‘(i) the stock of such corporation is 

2 regularly traded on an established securi3 ties market, or 

4 ‘‘(ii) the aggregate gross assets of 

5 such corporation (or any predecessor there6 of), including assets under management 

7 for investors, whether held directly or indi8 rectly, at any time during the taxable year 

9 or any preceding taxable year is 

10 $50,000,000 or more. 

11 ‘‘(B) GENERAL EXCEPTION.—A corpora12 tion shall not be treated as described in this 

13 paragraph if— 

14 ‘‘(i) such corporation was treated as a 

15 corporation described in this paragraph in 

16 a preceding taxable year, 

17 ‘‘(ii) such corporation— 

18 ‘‘(I) is not regularly traded on an 

19 established securities market, and 

20 ‘‘(II) has, and is reasonably ex21 pected to continue to have, aggregate 

22 gross assets (including assets under 

23 management for investors, whether 

24 held directly or indirectly) of less than 

25 $50,000,000, and 


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1 ‘‘(iii) the Secretary grants a waiver to 

2 such corporation under this subparagraph. 

3 ‘‘(3) MANAGEMENT AND CONTROL.— 

4 ‘‘(A) IN GENERAL.—The Secretary shall 

5 prescribe regulations for purposes of deter6 mining cases in which the management and 

7 control of a corporation is to be treated as oc8 curring primarily within the United States. 

9 ‘‘(B) EXECUTIVE OFFICERS AND SENIOR

10 MANAGEMENT.—Such regulations shall provide 

11 that— 

12 ‘‘(i) the management and control of a 

13 corporation shall be treated as occurring 

14 primarily within the United States if sub15 stantially all of the executive officers and 

16 senior management of the corporation who 

17 exercise day-to-day responsibility for mak18 ing decisions involving strategic, financial, 

19 and operational policies of the corporation 

20 are located primarily within the United 

21 States, and 

22 ‘‘(ii) individuals who are not executive 

23 officers and senior management of the cor24 poration (including individuals who are of25 ficers or employees of other corporations in 


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1 the same chain of corporations as the cor2 poration) shall be treated as executive offi3 cers and senior management if such indi4 viduals exercise the day-to-day responsibil5 ities of the corporation described in clause 

6 (i). 

7 ‘‘(C) CORPORATIONS PRIMARILY HOLDING

8 INVESTMENT ASSETS.—Such regulations shall 

9 also provide that the management and control 

10 of a corporation shall be treated as occurring 

11 primarily within the United States if— 

12 ‘‘(i) the assets of such corporation (di13 rectly or indirectly) consist primarily of as14 sets being managed on behalf of investors, 

15 and 

16 ‘‘(ii) decisions about how to invest the 

17 assets are made in the United States.’’. 

18 (b) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply to taxable years beginning on or 

20 after the date which is 2 years after the date of the enact21 ment of this Act. 


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1 SEC. 9. MODIFICATIONS TO BASE EROSION AND ANTI2 ABUSE TAX. 

3 (a) ACCELERATION OF MODIFICATIONS.—Section 

4 59A(b) of the Internal Revenue Code of 1986 is amend5 ed— 

6 (1) in paragraph (1)(A), by striking ‘‘10 per7 cent (5 percent in the case of taxable years begin8 ning in calendar year 2018)’’ and inserting ‘‘12.5 

9 percent’’, 

10 (2) in paragraph (1)(B), by striking ‘‘by the ex11 cess of’’ and all that follows and inserting ‘‘by the 

12 aggregate amount of the credits allowed under this 

13 chapter against such regular tax liability.’’, 

14 (3) by striking paragraphs (2) and (4) and re15 designating paragraph (3) as paragraph (2), and 

16 (4) in paragraph (2)(A) (as so redesignated), by 

17 striking ‘‘paragraphs (1)(A) and (2)(A) shall each’’ 

18 and inserting ‘‘paragraph (1)(A) shall’’. 

19 (b) MODIFICATIONS TO DEFINITION OF APPLICABLE

20 TAXPAYER.—Section 59A(e)(1) of the Internal Revenue 

21 Code of 1986 is amended— 

22 (1) by striking ‘‘$500,000,000’’ in subpara23 graph (B) and inserting ‘‘$25,000,000’’, and 

24 (2) by inserting ‘‘and’’ at the end of subpara25 graph (A), by striking ‘‘, and’’ at the end of subVerDate Sep 11 2014 04:08 Apr 19, 2024 Jkt 049200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\S4098.IS S4098

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1 paragraph (B) and inserting a period, and by strik2 ing subparagraph (C). 

3 (c) EXCEPTIONS TO DEFINITION OF BASE EROSION

4 PAYMENT.—Section 59A(d) of the Internal Revenue Code 

5 of 1986 is amended by adding at the end the following 

6 new paragraph: 

7 ‘‘(6) EXCEPTION FOR CERTAIN PAYMENTS IN8 CLUDIBLE IN GROSS INCOME OF PAYEE.— 

9 ‘‘(A) IN GENERAL.—Paragraph (1) shall 

10 not apply to any portion of an amount— 

11 ‘‘(i) which is paid or accrued by the 

12 taxpayer to a foreign person who is a 

13 member of the same controlled group of 

14 corporations as the taxpayer, and 

15 ‘‘(ii) which— 

16 ‘‘(I) is treated by the foreign per17 son as an amount of income from 

18 sources within the United States 

19 which is effectively connected with the 

20 conduct by such person of a trade or 

21 business within the United States, or 

22 ‘‘(II) if the foreign person is a 

23 controlled foreign corporation, is in24 cluded in the income of a United 

25 States shareholder of such controlled 


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•S 4098 IS

1 foreign corporation under section 

2 951(a). 

3 ‘‘(B) CONTROLLED GROUP OF CORPORA4 TIONS.—For purposes of this paragraph, the 

5 term ‘controlled group of corporations’ has the 

6 same meaning given to such term by section 

7 1563(a), except that— 

8 ‘‘(i) ‘more than 50 percent’ shall be 

9 substituted for ‘at least 80 percent’ each 

10 place it appears in section 1563(a)(1), and 

11 ‘‘(ii) the determination shall be made 

12 without regard to subsections (a)(4), 

13 (b)(2)(C), and (e)(3)(C) of section 1563.’’. 

14 (d) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to taxable years beginning in cal16 endar years beginning after the date of the enactment of 

17 this Act. 

18 SEC. 10. MODIFICATIONS OF FOREIGN TAX CREDIT RULES 

19 APPLICABLE TO OIL, GAS, MINING, GAM20 BLING AND OTHER INDUSTRY TAXPAYERS 

21 RECEIVING SPECIFIC ECONOMIC BENEFITS. 

22 (a) IN GENERAL.—Section 901 of the Internal Rev23 enue Code of 1986 is amended by redesignating subsection 

24 (n) as subsection (o) and by inserting after subsection (m) 

25 the following new subsection: 


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1 ‘‘(n) SPECIAL RULES RELATING TO DUAL CAPACITY

2 TAXPAYERS.— 

3 ‘‘(1) GENERAL RULE.—Notwithstanding any 

4 other provision of this chapter, any amount paid or 

5 accrued by a dual capacity taxpayer to a foreign 

6 country or possession of the United States for any 

7 period shall not be considered a tax— 

8 ‘‘(A) if, for such period, the foreign coun9 try or possession does not impose a generally 

10 applicable income tax, or 

11 ‘‘(B) to the extent such amount exceeds 

12 the amount (determined in accordance with reg13 ulations) which— 

14 ‘‘(i) is paid by such dual capacity tax15 payer pursuant to the generally applicable 

16 income tax imposed by the country or pos17 session, or 

18 ‘‘(ii) would be paid if the generally ap19 plicable income tax imposed by the country 

20 or possession were applicable to such dual 

21 capacity taxpayer. 

22 Nothing in this paragraph shall be construed to 

23 imply the proper treatment of any such amount 

24 not in excess of the amount determined under 

25 subparagraph (B). 


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1 ‘‘(2) DUAL CAPACITY TAXPAYER.—For pur2 poses of this subsection, the term ‘dual capacity tax3 payer’ means, with respect to any foreign country or 

4 possession of the United States, a person who— 

5 ‘‘(A) is subject to a levy of such country or 

6 possession, and 

7 ‘‘(B) receives (or will receive) directly or 

8 indirectly a specific economic benefit (as deter9 mined in accordance with regulations) from 

10 such country or possession. 

11 ‘‘(3) GENERALLY APPLICABLE INCOME TAX.— 

12 For purposes of this subsection— 

13 ‘‘(A) IN GENERAL.—The term ‘generally 

14 applicable income tax’ means an income tax (or 

15 a series of income taxes) which is generally im16 posed under the laws of a foreign country or 

17 possession on income derived from the conduct 

18 of a trade or business within such country or 

19 possession. 

20 ‘‘(B) EXCEPTIONS.—Such term shall not 

21 include a tax unless it has substantial applica22 tion, by its terms and in practice, to— 

23 ‘‘(i) persons who are not dual capacity 

24 taxpayers, and 


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1 ‘‘(ii) persons who are citizens or resi2 dents of the foreign country or posses3 sion.’’. 

4 (b) EFFECTIVE DATE.—The amendments made by 

5 this section shall apply to taxes paid or accrued in taxable 

6 years beginning after the date of the enactment of this 

7 Act. 

8 (c) SPECIAL RULE FOR TREATIES.—Notwith9 standing sections 894 or 7852(d) of the Internal Revenue 

10 Code of 1986, the amendments made by this section shall 

11 apply without regard to any treaty obligation of the 

12 United States. 

13 SEC. 11. LIMITATIONS ON TREATY BENEFITS. 

14 (a) LIMITATION FOR CERTAIN DEDUCTIBLE PAY15 MENTS.—Section 894 of the Internal Revenue Code of 

16 1986 is amended by adding at the end the following new 

17 subsection: 

18 ‘‘(d) LIMITATION ON TREATY BENEFITS FOR CER19 TAIN DEDUCTIBLE PAYMENTS.— 

20 ‘‘(1) IN GENERAL.—In the case of any deduct21 ible related-party payment, any withholding tax im22 posed under chapter 3 (and any tax imposed under 

23 subpart A or B of this part) with respect to such 

24 payment may not be reduced under any treaty of the 

25 United States unless any such withholding tax would 


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1 be reduced under a treaty of the United States if 

2 such payment were made directly to the foreign par3 ent corporation. 

4 ‘‘(2) DEDUCTIBLE RELATED-PARTY PAY5 MENT.—For purposes of this subsection, the term 

6 ‘deductible related-party payment’ means any pay7 ment made, directly or indirectly, by any person to 

8 any other person if the payment is allowable as a de9 duction under this chapter and both persons are 

10 members of the same foreign controlled group of en11 tities. 

12 ‘‘(3) FOREIGN CONTROLLED GROUP OF ENTI13 TIES.—For purposes of this subsection— 

14 ‘‘(A) IN GENERAL.—The term ‘foreign 

15 controlled group of entities’ means a controlled 

16 group of entities the common parent of which 

17 is a foreign corporation. 

18 ‘‘(B) CONTROLLED GROUP OF ENTITIES.— 

19 The term ‘controlled group of entities’ means a 

20 controlled group of corporations as defined in 

21 section 1563(a)(1), except that— 

22 ‘‘(i) ‘more than 50 percent’ shall be 

23 substituted for ‘at least 80 percent’ each 

24 place it appears therein, and 


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1 ‘‘(ii) the determination shall be made 

2 without regard to subsections (a)(4) and 

3 (b)(2) of section 1563. 

4 A partnership or any other entity (other than a 

5 corporation) shall be treated as a member of a 

6 controlled group of entities if such entity is con7 trolled (within the meaning of section 

8 954(d)(3)) by members of such group (includ9 ing any entity treated as a member of such 

10 group by reason of this sentence). 

11 ‘‘(4) FOREIGN PARENT CORPORATION.—For 

12 purposes of this subsection, the term ‘foreign parent 

13 corporation’ means, with respect to any deductible 

14 related-party payment, the common parent of the 

15 foreign controlled group of entities referred to in 

16 paragraph (3)(A). 

17 ‘‘(5) REGULATIONS.—The Secretary may pre18 scribe such regulations or other guidance as are nec19 essary or appropriate to carry out the purposes of 

20 this subsection, including regulations or other guid21 ance which provide for— 

22 ‘‘(A) the treatment of two or more persons 

23 as members of a foreign controlled group of en24 tities if such persons would be the common parVerDate Sep 11 2014 04:08 Apr 19, 2024 Jkt 049200 PO 00000 Frm 00034 Fmt 6652 Sfmt 6201 E:\BILLS\S4098.IS S4098

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1 ent of such group if treated as one corporation, 

2 and 

3 ‘‘(B) the treatment of any member of a 

4 foreign controlled group of entities as the com5 mon parent of such group if such treatment is 

6 appropriate taking into account the economic 

7 relationships among such entities.’’. 

8 (b) LIMITATION FOR CERTAIN INCOME ATTRIB9 UTABLE TO PERMANENT ESTABLISHMENTS IN A THIRD

10 COUNTRY.—Section 894 of such Code, as amended by 

11 subsection (a), is amended by adding at the end the fol12 lowing new subsection: 

13 ‘‘(e) DENIAL OF TREATY BENEFITS WITH RESPECT

14 TO CERTAIN INCOME ATTRIBUTABLE TO A PERMANENT

15 ESTABLISHMENT IN A THIRD COUNTRY.—A foreign per16 son shall not be entitled under any income tax treaty of 

17 the United States with a foreign country to any exemption 

18 from, or reduction of, any tax with respect to income if— 

19 ‘‘(1) such income is income from sources within 

20 the United States, and 

21 ‘‘(2) such income is attributable to a permanent 

22 establishment which is outside of such foreign coun23 try and— 

24 ‘‘(A) the profits of which are subject to a 

25 combined aggregate effective rate of tax in such 


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1 foreign country and the country of the perma2 nent establishment that is less than the lesser 

3 of— 

4 ‘‘(i) 15 percent, or 

5 ‘‘(ii) 60 percent of the general statu6 tory rate of tax on income on corporations 

7 in such foreign country, or 

8 ‘‘(B) which is located in a foreign country 

9 with which the United States does not have an 

10 income tax treaty and is not taxed by the for11 eign country which is a party to the treaty.’’. 

12 (c) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to payments made after the date 

14 of the enactment of this Act. 

15 (d) SPECIAL RULE FOR TREATIES.—Notwith16 standing sections 894 or 7852(d) of the Internal Revenue 

17 Code of 1986, the amendments made by this section shall 

18 apply without regard to any treaty obligation of the 

19 United States. 

20 SEC. 12. REPEAL OF DEDUCTION FOR FOREIGN-DERIVED 

21 INTANGIBLE INCOME. 

22 (a) IN GENERAL.—Part VIII of subchapter B of 

23 chapter 1 of the Internal Revenue Code of 1986 is amend24 ed by striking section 250 (and the item related to such 

25 section in the table of sections for such part). 


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1 (b) CONFORMING AMENDMENTS.— 

2 (1) Section 172(d) of the Internal Revenue 

3 Code of 1986 is amended by striking paragraph (9). 

4 (2) Section 246(b) of such Code is amended— 

5 (A) by striking the comma after ‘‘section 

6 243(a)(1)’’ the first place it appears and insert7 ing ‘‘and’’ and by striking ‘‘and section 250’’, 

8 and 

9 (B) by inserting ‘‘and’’ after ‘‘section 

10 243(a)(1)’’ the second place it appears and by 

11 striking ‘‘, and 250’’. 

12 (c) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to taxable years beginning after 

14 December 31, 2024. 

Æ 


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