I 

118TH CONGRESS 

2D SESSION H. R. 8895 

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 

JUNE 28, 2024 

Mr. KIM of New Jersey (for himself and Mr. SUOZZI) 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. 

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

3 SECTION 1. CERTAIN PAYMENTS TO FOREIGN RELATED 

4 PARTIES SUBJECT TO SUFFICIENT FOREIGN 

5 TAX NOT TREATED AS BASE EROSION PAY6 MENTS. 

7 (a) IN GENERAL.—Section 59A of the Internal Rev8 enue Code of 1986 is amended by redesignating subsection 


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1 (i) as subjection (j) and by inserting after subsection (h) 

2 the following new subsection: 

3 ‘‘(i) CERTAIN PAYMENTS TO FOREIGN RELATED

4 PARTIES SUBJECT TO SUFFICIENT FOREIGN TAX NOT

5 TREATED AS BASE EROSION PAYMENTS.— 

6 ‘‘(1) IN GENERAL.—An amount shall not be 

7 treated as a base erosion payment if the taxpayer es8 tablishes to the satisfaction of the Secretary that— 

9 ‘‘(A) the foreign person to whom such 

10 amount is paid or incurred is subject to an ef11 fective rate of foreign income tax of at least 15 

12 percent, and 

13 ‘‘(B) such amount is subject to an effective 

14 rate of foreign income tax of at least 15 per15 cent. 

16 ‘‘(2) DETERMINATION OF EFFECTIVE RATE ON

17 BASIS OF APPLICABLE FINANCIAL STATEMENTS.— 

18 Except as otherwise provided by the Secretary, the 

19 effective rate of foreign income tax may be estab20 lished on the basis of applicable financial statements 

21 (as defined in section 451(b)(3)) with appropriate 

22 adjustments (as determined by the Secretary) for ex23 cluded dividends, net tax expense, excluded equity 

24 gain or loss, included revaluation method gain or 

25 loss, gain or loss from intragroup transfers of assets 


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1 and liabilities, asymmetric foreign currency gains or 

2 losses, bribes, illegal payments, large penalties, prior 

3 period errors and changes in accounting methods, 

4 accrued pension expenses, and such other items as 

5 the Secretary may provide. 

6 ‘‘(3) FOREIGN INCOME TAX.—For purposes of 

7 this subsection, the term ‘‘foreign income taxes’’ 

8 means any income, war profits, or excess profits 

9 taxes paid or accrued to any foreign country or to 

10 any possession of the United States.’’. 

11 (b) REGULATIONS.—Section 59A(j) of such Code, as 

12 redesignated by subsection (a), is amended by striking 

13 ‘‘and’’ at the end of paragraph (1), by striking the period 

14 at the end of paragraph (2) and inserting ‘‘, and’’, and 

15 by adding at the end the following new paragraph: 

16 ‘‘(3) for the application of subsection (i), in17 cluding— 

18 ‘‘(A) procedures for determining the effec19 tive rate of foreign income tax, and 

20 ‘‘(B) rules to the prevent tax avoidance or 

21 abuse, including rules for recharacterizing a 

22 transaction or series of transactions among re23 lated parties.’’. 


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

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

Æ 


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