I 
117TH CONGRESS 
2D SESSION 
H. R. 9385 
To impose restrictions on the investment in Chinese companies by tax-exempt 
entities. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 1, 2022 
Mr. GALLAGHER introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committee on Foreign 
Affairs, for a period to be subsequently determined by the Speaker, in 
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned 
A BILL 
To impose restrictions on the investment in Chinese 
companies by tax-exempt entities. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Dump Investments in 
Troublesome Communist Holdings Act’’ or as the 
‘‘DITCH Act’’. 
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SEC. 2. RESTRICTION ON INVESTMENT IN CHINESE COMPA-
NIES BY TAX-EXEMPT ENTITIES. 
(a) IN GENERAL.—Section 501 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(s) RESTRICTION
ON INVESTMENT
IN CHINESE 
COMPANIES.— 
‘‘(1) IN GENERAL.—An organization shall not 
be treated as described in subsection (c) or (d) or 
section 401(a) for any taxable year if— 
‘‘(A) such organization holds any interest 
in a disqualified Chinese company at any time 
during such taxable year, or 
‘‘(B) fails to timely transmit the annual re-
port described in paragraph (5) for such tax-
able year. 
‘‘(2) DISQUALIFIED
CHINESE
COMPANY.—For 
purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘disqualified 
Chinese company’ means any corporation— 
‘‘(i) that is incorporated in China, or 
‘‘(ii) more than 10 percent of the 
stock of which (determined by vote or 
value) is held (directly or indirectly 
through any chain of ownership) by any of 
the following (or combination thereof): 
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‘‘(I) 1 or more corporations de-
scribed in clause (i). 
‘‘(II) China or any governmental 
agency thereof. 
‘‘(III) Provincial, regional, mu-
nicipal, Special Administrative Re-
gions, prefecture, county, township, 
village, or any other Chinese sub-na-
tional governmental entity or agency. 
‘‘(IV) Any entity controlled (di-
rectly or indirectly) by the Chinese 
Communist Party or any Chinese 
Communist Party organ. 
‘‘(V) Any Chinese national. 
‘‘(B) APPLICATION
TO
ENTITIES
OTHER 
THAN CORPORATIONS.—In the case of any busi-
ness organization which is not a corporation, 
subparagraph (A) shall apply to such organiza-
tion in the same manner as though such organi-
zation were a corporation. 
‘‘(C) APPLICATION TO INDIRECT, DERIVA-
TIVE, OR
OTHER
CONTRACTUAL
INTERESTS, 
ETC.—For purposes of this subsection, an orga-
nization shall be treated as holding an interest 
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in a disqualified Chinese company if such orga-
nization— 
‘‘(i) holds such interest (or any instru-
ment described in subparagraph (A)) di-
rectly or indirectly through any chain of 
ownership, or 
‘‘(ii) holds any derivative financial in-
strument or other contractual arrangement 
with respect to such interest or company 
(including any financial instrument or 
other contract which seeks to replicate any 
financial return with respect to such inter-
est or such company). 
‘‘(D) PUBLICATION
OF
LIST
BY
SEC-
RETARY.—The Secretary shall, not later than 
120 days after the date of the enactment of this 
Act, establish a process for the periodic pub-
lishing of a list of certified pooled investments, 
including exchange traded funds and mutual 
funds, that do not have exposure to disqualified 
Chinese companies. 
‘‘(3) WAIVERS.— 
‘‘(A) IN
GENERAL.—Paragraph (1) shall 
not apply with respect to any interest in a dis-
qualified Chinese company held by any organi-
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zation during any taxable year if the Secretary 
issues a waiver to such organization with re-
spect to such interest for such taxable year 
under this paragraph. Any waiver issued under 
this paragraph shall be subject to renewal or 
expiration on a biannual basis. 
‘‘(B) WAIVER PROCESS.— 
‘‘(i) APPLICATION.—Not later than 60 
days after the date of the enactment of 
this subsection, the Secretary shall estab-
lish a process under which an organization 
may submit a written application for a 
waiver under this paragraph. Such applica-
tion shall be made publicly available and 
shall include: 
‘‘(I) An explanation of the need 
for such waiver and the reasons that 
the need for such waiver outweigh the 
threat posed to the United States by 
China and the lack of separation be-
tween China and the disqualified Chi-
nese company involved. 
‘‘(II) The type (including sector 
of the economy), amount, and dura-
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tion of the investment in the disquali-
fied Chinese company. 
‘‘(III) The relationship between 
the disqualified Chinese company and 
China. 
‘‘(IV) 
The 
extenuating 
cir-
cumstances justifying the applicant’s 
need to invest in the disqualified Chi-
nese company. 
‘‘(ii) RESPONSE.—The Secretary shall 
provide a written response to each com-
pleted application under clause (i) not later 
than 60 days after receipt of such applica-
tion. Such written response shall be made 
publicly available and shall include: 
‘‘(I) A statement of whether the 
waiver has been provided or withheld. 
‘‘(II) The reasons for providing 
or withholding the waiver. 
‘‘(III) The identification of any 
future investments with respect to 
which such waiver applies. 
‘‘(IV) The date on which such 
waiver expires (which may not be later 
than the earlier of the termination of 
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the extenuating circumstances re-
ferred to in clause (i)(IV) or the end 
of the biannual period referred to in 
subparagraph (A)). 
‘‘(C) STANDARDS
FOR
DETERMINING
IF 
WAIVER IS PROVIDED.—The Secretary may pro-
vide a waiver under this paragraph only if the 
Secretary independently determines that— 
‘‘(i) the need for such waiver, and the 
reasons for the need for such waiver, out-
weigh the threat posed to the United 
States by China and the lack of separation 
between China and the disqualified Chinese 
company involved, and 
‘‘(ii) extenuating circumstances justify 
the applicant’s need to invest in the dis-
qualified Chinese company. 
For purposes of this subparagraph, the Sec-
retary shall not consider the past or future fi-
nancial returns of any investment in any dis-
qualified Chinese company, or any other jus-
tification based on the applicant’s own financial 
needs, as an extenuating circumstance justi-
fying such an investment. 
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‘‘(D) PUBLICATION
OF
WAIVERS
PRO-
VIDED.—With respect to each calendar quarter, 
the Secretary shall publish and make publicly 
available a list of the waivers provided by the 
Secretary under this paragraph during such 
quarter. 
‘‘(4) CHINA.—For purposes of this section, the 
term ‘China’ means the People’s Republic of China 
and includes any subordinate Special Administrative 
Regions thereof. 
‘‘(5) ANNUAL REPORT.—Each organization de-
scribed in paragraph (1) with respect to each taxable 
year shall, not later than the due date for the return 
of tax for such taxable year, transmit to the Sec-
retary a written report including— 
‘‘(A) a description of each interest in a dis-
qualified Chinese company held by such organi-
zation during such taxable year, 
‘‘(B) the period for any such interest that 
was so held, and 
‘‘(C) whether such organization has a 
waiver under paragraph (3) to hold such inter-
est during such period.’’. 
(b) EFFECTIVE DATE.— 
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(1) IN GENERAL.—The amendments made by 
this section shall apply to taxable years ending after 
the date of the enactment of this Act, except that 
only periods after the date that is 270 days after the 
date of the enactment of this Act shall be taken into 
account in determining whether the requirement of 
section 501(s) of the Internal Revenue Code of 1986 
(as added by this section) is met with respect to any 
taxable year. 
(2) 1-YEAR
GRACE
PERIOD
UNDER
CERTAIN 
CIRCUMSTANCES.—In the case of any organization 
that, after intensive due diligence, is unaware of the 
failure to satisfy the requirement of such section 
501(s), paragraph (1) shall be applied by sub-
stituting ‘‘1 year’’ for ‘‘270 days’’. 
(c) PUBLIC REPORT.—Not later than 360 days after 
the date of the enactment of this Act, and annually there-
after, the Secretary of the Treasury (or the Secretary’s 
delegate) shall publicly release a report describing the pat-
terns of United States outbound investment in China, in-
cluding such investment by organizations described in sec-
tion 501(s)(1) of the Internal Revenue Code of 1986 (as 
added by this section). Such report shall detail the sectoral 
breadkown of such investments. 
Æ 
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