II 

118TH CONGRESS 

1ST SESSION S. 2750 

To impose restrictions on the investment in Chinese companies by tax-exempt 

entities. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 7, 2023 

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

to the Committee on Finance 

A BILL 

To impose restrictions on the investment in Chinese 

companies by tax-exempt entities. 

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 ‘‘Dump Investments in 

5 Troublesome Communist Holdings Act’’ or as the 

6 ‘‘DITCH Act’’. 


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1 SEC. 2. RESTRICTION ON INVESTMENT IN CHINESE COMPA2 NIES BY TAX-EXEMPT ENTITIES. 

3 (a) IN GENERAL.—Section 501 of the Internal Rev4 enue Code of 1986 is amended by adding at the end the 

5 following new subsection: 

6 ‘‘(s) RESTRICTION ON INVESTMENT IN CHINESE

7 COMPANIES.— 

8 ‘‘(1) IN GENERAL.—An organization shall not 

9 be treated as described in subsection (c) or (d) or 

10 section 401(a) for any taxable year if such organiza11 tion— 

12 ‘‘(A) holds any interest in a disqualified 

13 Chinese company at any time during such tax14 able year, or 

15 ‘‘(B) fails to timely transmit the annual re16 port described in paragraph (5) for such tax17 able year. 

18 ‘‘(2) DISQUALIFIED CHINESE COMPANY.—For 

19 purposes of this subsection— 

20 ‘‘(A) IN GENERAL.—The term ‘disqualified 

21 Chinese company’ means any corporation— 

22 ‘‘(i) that is incorporated in China, or 

23 ‘‘(ii) more than 10 percent of the 

24 stock of which (determined by vote or 

25 value) is held (directly or indirectly 


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1 through any chain of ownership) by any of 

2 the following (or combination thereof): 

3 ‘‘(I) 1 or more corporations de4 scribed in clause (i). 

5 ‘‘(II) China or any governmental 

6 agency thereof. 

7 ‘‘(III) Provincial, regional, mu8 nicipal, Special Administrative Re9 gions, prefecture, county, township, 

10 village, or any other Chinese sub-na11 tional governmental entity or agency. 

12 ‘‘(IV) Any entity controlled (di13 rectly or indirectly) by the Chinese 

14 Communist Party or any Chinese 

15 Communist Party organ. 

16 ‘‘(V) Any Chinese national. 

17 ‘‘(B) APPLICATION TO ENTITIES OTHER

18 THAN CORPORATIONS.—In the case of any busi19 ness organization which is not a corporation, 

20 subparagraph (A) shall apply to such organiza21 tion in the same manner as though such organi22 zation were a corporation. 

23 ‘‘(C) APPLICATION TO INDIRECT, DERIVA24 TIVE, OR OTHER CONTRACTUAL INTERESTS, 

25 ETC.—For purposes of this subsection, an orgaVerDate Sep 11 2014 20:28 Sep 08, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2750.IS S2750

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1 nization shall be treated as holding an interest 

2 in a disqualified Chinese company if such orga3 nization— 

4 ‘‘(i) holds such interest (or any instru5 ment described in subparagraph (A)) di6 rectly or indirectly through any chain of 

7 ownership, or 

8 ‘‘(ii) holds any derivative financial in9 strument or other contractual arrangement 

10 with respect to such interest or company 

11 (including any financial instrument or 

12 other contract which seeks to replicate any 

13 financial return with respect to such inter14 est or such company). 

15 ‘‘(D) PUBLICATION OF LIST BY SEC16 RETARY.—The Secretary shall, not later than 

17 120 days after the date of the enactment of this 

18 subsection, establish a process for the periodic 

19 publishing of a list of certified pooled invest20 ments, including exchange traded funds and 

21 mutual funds, that do not have exposure to dis22 qualified Chinese companies. 

23 ‘‘(3) WAIVERS.— 

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

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1 qualified Chinese company held by any organi2 zation during any taxable year if the Secretary 

3 issues a waiver to such organization with re4 spect to such interest for such taxable year 

5 under this paragraph. Any waiver issued under 

6 this paragraph shall be subject to renewal or 

7 expiration on a biannual basis. 

8 ‘‘(B) WAIVER PROCESS.— 

9 ‘‘(i) APPLICATION.—Not later than 60 

10 days after the date of the enactment of 

11 this subsection, the Secretary shall estab12 lish a process under which an organization 

13 may submit a written application for a 

14 waiver under this paragraph. Such applica15 tion shall be made publicly available and 

16 shall include the following: 

17 ‘‘(I) An explanation of the need 

18 for such waiver and the reasons that 

19 the need for such waiver outweigh the 

20 threat posed to the United States by 

21 China and the lack of separation be22 tween China and the disqualified Chi23 nese company involved. 

24 ‘‘(II) The type (including sector 

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1 tion of the investment in the disquali2 fied Chinese company. 

3 ‘‘(III) The relationship between 

4 the disqualified Chinese company and 

5 China. 

6 ‘‘(IV) The extenuating cir7 cumstances justifying the applicant’s 

8 need to invest in the disqualified Chi9 nese company. 

10 ‘‘(ii) RESPONSE.—The Secretary shall 

11 provide a written response to each com12 pleted application under clause (i) not later 

13 than 60 days after receipt of such applica14 tion. Such written response shall be made 

15 publicly available and shall include the fol16 lowing: 

17 ‘‘(I) A statement of whether the 

18 waiver has been provided or withheld. 

19 ‘‘(II) The reasons for providing 

20 or withholding the waiver. 

21 ‘‘(III) The identification of any 

22 future investments with respect to 

23 which such waiver applies. 

24 ‘‘(IV) The date on which such 

25 waiver expires (which may not be later 


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1 than the earlier of the termination of 

2 the extenuating circumstances re3 ferred to in clause (i)(IV) or the end 

4 of the biannual period referred to in 

5 subparagraph (A)). 

6 ‘‘(C) STANDARDS FOR DETERMINING IF

7 WAIVER IS PROVIDED.—The Secretary may pro8 vide a waiver under this paragraph only if the 

9 Secretary independently determines that— 

10 ‘‘(i) the need for such waiver, and the 

11 reasons for the need for such waiver, out12 weigh the threat posed to the United 

13 States by China and the lack of separation 

14 between China and the disqualified Chinese 

15 company involved, and 

16 ‘‘(ii) extenuating circumstances justify 

17 the applicant’s need to invest in the dis18 qualified Chinese company. 

19 For purposes of this subparagraph, the Sec20 retary shall not consider the past or future fi21 nancial returns of any investment in any dis22 qualified Chinese company, or any other jus23 tification based on the applicant’s own financial 

24 needs, as an extenuating circumstance justi25 fying such an investment. 


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1 ‘‘(D) PUBLICATION OF WAIVERS PRO2 VIDED.—With respect to each calendar quarter, 

3 the Secretary shall publish and make publicly 

4 available a list of the waivers provided by the 

5 Secretary under this paragraph during such 

6 quarter. 

7 ‘‘(4) CHINA.—For purposes of this section, the 

8 term ‘China’ means the People’s Republic of China 

9 and includes any subordinate Special Administrative 

10 Regions thereof. 

11 ‘‘(5) ANNUAL REPORT.—Each organization de12 scribed in paragraph (1) with respect to each taxable 

13 year shall, not later than the due date for the return 

14 of tax for such taxable year, transmit to the Sec15 retary a written report including— 

16 ‘‘(A) a description of each interest in a dis17 qualified Chinese company held by such organi18 zation during such taxable year, 

19 ‘‘(B) the period during which such interest 

20 was so held, and 

21 ‘‘(C) whether such organization has a 

22 waiver under paragraph (3) to hold such inter23 est during such period.’’. 

24 (b) EFFECTIVE DATE.— 


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1 (1) IN GENERAL.—The amendment made by 

2 this section shall apply to taxable years ending after 

3 the date of the enactment of this Act, except that 

4 only periods after the date that is 270 days after the 

5 date of the enactment of this Act shall be taken into 

6 account in determining whether the requirement of 

7 section 501(s) of the Internal Revenue Code of 1986 

8 (as added by this section) is met with respect to any 

9 taxable year. 

10 (2) 1-YEAR GRACE PERIOD UNDER CERTAIN

11 CIRCUMSTANCES.—In the case of organization that, 

12 after intensive due diligence, is unaware of the fail13 ure to satisfy the requirement of such section 

14 501(s), paragraph (1) shall be applied by sub15 stituting ‘‘1 year’’ for ‘‘270 days’’. 

16 (c) PUBLIC REPORT.—Not later than 360 days after 

17 the date of the enactment of this Act, and annually there18 after, the Secretary of the Treasury (or the Secretary’s 

19 delegate) shall publicly release a report describing the pat20 terns of United States outbound investment in China, in21 cluding such investment by organizations described in sec22 tion 501(s)(1) of the Internal Revenue Code of 1986 (as 

23 added by this section). Such report shall detail the sectoral 

24 breakdown of such investments. 

Æ 


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