Protecting American Advanced Manufacturing Act

To amend the Internal Revenue Code of 1986 to disallow companies associated with foreign adversaries from receiving the advanced manufacturing production credit. 1. Short title This Act may be cited as the Protecting American Advanced Manufacturing Act 2. Prohibition on allowance of advanced manufacturing production credit for eligible components produced by companies associated with foreign adversaries (a) In general Section 45X (e) Prohibition on allowance of credit for eligible components produced by companies associated with foreign adversaries (1) In general No credit shall be allowed under subsection (a) with respect to any eligible component which is produced by a disqualified entity. (2) Disqualified entity (A) In general For purposes of this subsection, the term disqualified entity (B) Foreign adversary parties The entities described in this subparagraph consist of the following: (i) The government of a foreign adversary, any agency or government instrumentality of a foreign adversary, or any entity which is directly or indirectly owned, controlled, or directed by any such government, agency, or government instrumentality. (ii) Any entity organized under the laws of a foreign adversary (or any political subdivision thereof) or whose headquarters is located within a foreign adversary. (C) Owned, controlled, directed, or influenced by foreign adversary parties The entities described in this subparagraph consist of the following: (i) Any entity for which, on any date during the taxable year, not less than 10 percent of the outstanding equity interests (by value, voting, governance, board appointment, or similar rights or influence) are held directly or indirectly by, or on behalf of, 1 or more of the entities described in subparagraph (B), including through interests in co-investment vehicles, joint ventures, or similar arrangements. (ii) Any entity which is directly or indirectly controlled, directed, or materially influenced by any entity described in subparagraph (B). (iii) Any entity for which the actions, management, ownership, or operations of such entity are subject to the direct influence of an entity described in subparagraph (B). (iv) Any entity for which an interest in such entity is held by an entity described in subparagraph (B) (referred to in this clause as the beneficiary firm (D) Debt or other arrangements with foreign adversary parties (i) In general An entity is described in this subparagraph if, as a result of any prohibited obligation or arrangement— (I) the actions, management, or operations of such entity are subject to the direct or indirect influence of 1 or more entities described in subparagraph (B) or (C), or (II) such entity provides a substantial benefit to 1 or more entities described in subparagraph (B) or (C). (ii) Prohibited obligation or arrangement For purposes of this subparagraph, the term prohibited obligation or arrangement (I) debt, (II) lease or sublease arrangement, (III) management or operating arrangement, (IV) contract manufacturing arrangement, (V) license or sublicense agreement, or (VI) financial derivative. (iii) Exception For purposes of clause (i)(II), the purchase of equipment or manufacturing inputs in an arm's-length transaction shall not, in and of itself, be deemed to provide a substantial benefit. (E) Other definitions For purposes of this paragraph— (i) Control The term control Protecting American Advanced Manufacturing Act (ii) Foreign adversary The term foreign adversary covered nation (3) Administration The Secretary may issue such guidance as is necessary to carry out the purposes of this subsection, including establishment of rules for— (A) implementation of paragraph (2)(C)(i) for determination of whether the percentage requirements with respect to outstanding equity interests have been satisfied in the case of an entity for which the stock of such entity is traded on an established securities market in the United States or any foreign country, and (B) preventing entities from evading, circumventing, or abusing the application of the requirements under this subsection. . (b) Effective date The amendment made by this section shall apply to taxable years beginning after the date of enactment of this Act.

Summary: Protecting American Advanced Manufacturing Act This bill prohibits companies associated with governments of foreign adversaries from receiving the advanced manufacturing production tax credit. This includes companies that are owned, controlled by, operated by, or under the influence of a foreign adversary, any company whose equity interests are held by a foreign adversary (not less than 10%), or any company that is controlled by a foreign adversary through certain debt, lease, or manufacturing arrangements.