I 
118TH CONGRESS 
2D SESSION 
H. R. 8895 
To amend the Internal Revenue Code of 1986 to provide that certain pay-
ments 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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. CERTAIN PAYMENTS TO FOREIGN RELATED 
PARTIES SUBJECT TO SUFFICIENT FOREIGN 
TAX NOT TREATED AS BASE EROSION PAY-
MENTS. 
(a) IN GENERAL.—Section 59A of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
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(i) as subjection (j) and by inserting after subsection (h) 
the following new subsection: 
‘‘(i) CERTAIN PAYMENTS
TO FOREIGN RELATED 
PARTIES SUBJECT TO SUFFICIENT FOREIGN TAX NOT 
TREATED AS BASE EROSION PAYMENTS.— 
‘‘(1) IN GENERAL.—An amount shall not be 
treated as a base erosion payment if the taxpayer es-
tablishes to the satisfaction of the Secretary that— 
‘‘(A) the foreign person to whom such 
amount is paid or incurred is subject to an ef-
fective rate of foreign income tax of at least 15 
percent, and 
‘‘(B) such amount is subject to an effective 
rate of foreign income tax of at least 15 per-
cent. 
‘‘(2) DETERMINATION OF EFFECTIVE RATE ON 
BASIS OF APPLICABLE FINANCIAL STATEMENTS.— 
Except as otherwise provided by the Secretary, the 
effective rate of foreign income tax may be estab-
lished on the basis of applicable financial statements 
(as defined in section 451(b)(3)) with appropriate 
adjustments (as determined by the Secretary) for ex-
cluded dividends, net tax expense, excluded equity 
gain or loss, included revaluation method gain or 
loss, gain or loss from intragroup transfers of assets 
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and liabilities, asymmetric foreign currency gains or 
losses, bribes, illegal payments, large penalties, prior 
period errors and changes in accounting methods, 
accrued pension expenses, and such other items as 
the Secretary may provide. 
‘‘(3) FOREIGN INCOME TAX.—For purposes of 
this subsection, the term ‘‘foreign income taxes’’ 
means any income, war profits, or excess profits 
taxes paid or accrued to any foreign country or to 
any possession of the United States.’’. 
(b) REGULATIONS.—Section 59A(j) of such Code, as 
redesignated by subsection (a), is amended by striking 
‘‘and’’ at the end of paragraph (1), by striking the period 
at the end of paragraph (2) and inserting ‘‘, and’’, and 
by adding at the end the following new paragraph: 
‘‘(3) for the application of subsection (i), in-
cluding— 
‘‘(A) procedures for determining the effec-
tive rate of foreign income tax, and 
‘‘(B) rules to the prevent tax avoidance or 
abuse, including rules for recharacterizing a 
transaction or series of transactions among re-
lated parties.’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
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