‘‘(d) EXCEPTION
FOR
PEOPLE’S
REPUBLIC
OF 
CHINA.— 
‘‘(1) IN GENERAL.—The rates of tax imposed 
under sections 871 and 881, and the rates of with-
holding tax imposed under chapter 3, with respect to 
any resident of the People’s Republic of China shall 
be determined without regard to any provision of the 
Agreement between the Government of the United 
States of America and the Government of the Peo-
ple’s Republic of China for the Avoidance of Double 
Taxation and the Prevention of Tax Evasion with 
Respect to Taxes on Income, signed at Beijing on 
April 30, 1984. 
‘‘(2) REGULATIONS.—The Secretary shall pro-
mulgate regulations to prevent the avoidance of the 
purposes of this subsection through the use of for-
eign entities.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to income received after the date 
of the enactment of this Act. 
SEC. 203. TAXATION OF OBLIGATIONS OF THE UNITED 
STATES HELD BY THE GOVERNMENT OF THE 
PEOPLE’S REPUBLIC OF CHINA. 
(a) IN GENERAL.—Section 892 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
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(c) as subsection (d) and by inserting after subsection (b) 
the following new subsection: 
‘‘(c) EXCEPTION.—This section shall not apply to the 
Government of the People’s Republic of China.’’. 
(b) CENTRAL BANK.—Section 895 of the Internal 
Revenue Code of 1986 is amended— 
(1) by striking ‘‘Income’’ and inserting the fol-
lowing: 
‘‘(a) IN GENERAL.—Income’’, and 
(2) by adding at the end the following new sub-
section: 
‘‘(b) EXCEPTION.—This section shall not apply to the 
any central bank of the People’s Republic of China.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to income received or derived after 
the date of the enactment of this Act. 
SEC. 204. SURTAX ON CERTAIN INCOME DERIVED FROM 
CHINA. 
(a) IN GENERAL.—Subpart D of part II of sub-
chapter N of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new 
section: 
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‘‘SEC. 899. IMPOSITION OF SURTAX ON CERTAIN INCOME 
FROM CHINA. 
‘‘(a) IN GENERAL.—In addition to other taxes, there 
is imposed on the China source income of any applicable 
United States person a tax equal to 2 percent of such in-
come. 
‘‘(b) APPLICABLE UNITED STATES PERSON.—For 
purposes of this subsection, the term ‘applicable United 
States person’ means any United States person who— 
‘‘(1) holds an investment through a partnership 
with a resident of the People’s Republic of China, or 
‘‘(2) participates in a joint shareholding venture 
with a resident of the People’s Republic of China. 
‘‘(c) CHINA SOURCE INCOME.—For purposes of this 
section, the term ‘China source income’ means any 
amount received from sources within the People’s Republic 
of China which is attributable to an investment described 
in subsection (b)(1) or a venture described in subsection 
(b)(2). Such amount shall be reduced so as to take into 
account deductions (including taxes) properly allocable to 
such income under rules similar to the rules of section 
954(b)(5).’’. 
(b) TAX NOT TREATED AS PART OF REGULAR TAX 
LIABILITY.—Section 26(b)(2) of such Code is amended by 
striking ‘‘and’’ at the end of subparagraph (X), by striking 
the period at the end of subparagraph (Y) and inserting 
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‘‘, and’’, and by adding at the end the following new sub-
paragraph: 
‘‘(Z) section 899 (relating to surtax on cer-
tain income from China).’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part II of subchapter N of chapter 1 
of such Code is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 899. Imposition of surtax on certain income from China.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to income received after the date 
of the enactment of this Act. 
TITLE III—STOPPING FOREIGN 
BUSINESSES SANCTUARY ACT 
OF 2018 
SEC. 301. SHORT TITLE. 
This title may be cited as the ‘‘Stopping Foreign 
Businesses Sanctuary Act of 2018’’. 
SEC. 302. JURISDICTION OVER CERTAIN FOREIGN ENTI-
TIES. 
Section 1605 of title 28, United States Code, is 
amended by inserting after subsection (d) the following: 
‘‘(e) Notwithstanding any other provision of law, an 
entity is not immune from the jurisdiction of the courts 
of the United States or of the States if the entity— 
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‘‘(1) is incorporated in a foreign state in which 
state-owned or state-controlled entities commonly en-
gage in commercial activity; and 
‘‘(2) conducts commercial activity in the United 
States.’’. 
SEC. 303. COMMERCIAL ACTIVITY OF AFFILIATE ENTITIES. 
Section 1603(d) of title 28, United States Code, is 
amended— 
(1) by inserting ‘‘(1)’’ before ‘‘A’’; and 
(2) by adding at the end the following: 
‘‘(2) For purposes of this chapter, a commercial 
activity of an agency or instrumentality of a foreign 
state, or of an entity described in section 1605(e), 
shall be attributable to any corporate affiliate of the 
agency, instrumentality, or entity that— 
‘‘(A) directly or indirectly owns a majority 
of shares of the agency, instrumentality, or en-
tity; and 
‘‘(B) is also an agency or instrumentality 
of a foreign state, or an entity described in sec-
tion 1605(e).’’. 
Æ 
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