Fairness in International Taxation Act

Bill: 113-hr-1556
Sponsor: full_name: Rep. Doggett, Lloyd [D-TX-35]
Introduced: 2013-04-15
Policy area: Taxation
Subjects: Administrative law and regulatory procedures

Corporate finance and management

Department of the Treasury

Employment taxes

Foreign and international corporations

Income tax deductions

International law and treaties

Taxation of foreign income
Latest action: action_date: 2013-04-15
text: Referred to the House Committee on Ways and Means.

Summaries:
action_date: 2013-04-15
action_desc: Introduced in House
text: <p>Fairness in International Taxation Act - Amends the Internal Revenue Code to prohibit a reduction under any treaty of the United States of tax withholding for a tax deductible payment made between persons who are members of the same foreign controlled group of entities unless there would be a similar reduction for payments made directly to the foreign parent corporation of such entities. </p>

tv_txt: I 113th CONGRESS 1st Session H. R. 1556 IN THE HOUSE OF REPRESENTATIVES April 15, 2013 Mr. Doggett (for himself, Mr. DeFazio , Ms. DeLauro , Mr. Dingell , Mr. Moran , Ms. Lee of California , Mr. Rush , Mr. Garamendi , Ms. Schakowsky , Mr. McDermott , Mr. Cicilline , and Mr. Cohen ) 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 prevent corporations from exploiting tax treaties to evade taxation of United States income.

1. Short title This Act may be cited as the Fairness in International Taxation Act . 2. Limitation on treaty benefits for certain deductible payments (a) In general Section 894 of the Internal Revenue Code of 1986 (relating to income affected by treaty) is amended by adding at the end the following new subsection: (d) Limitation on treaty benefits for certain deductible payments (1) In general In the case of any deductible related-party payment, any withholding tax imposed under chapter 3 (and any tax imposed under subpart A or B of this part) with respect to such payment may not be reduced under any treaty of the United States unless any such withholding tax would be reduced under a treaty of the United States if such payment were made directly to the foreign parent corporation. (2) Deductible related-party payment For purposes of this subsection, the term deductible related-party payment means any payment made, directly or indirectly, by any person to any other person if the payment is allowable as a deduction under this chapter and both persons are members of the same foreign controlled group of entities. (3) Foreign controlled group of entities For purposes of this subsection— (A) In general The term foreign controlled group of entities means a controlled group of entities the common parent of which is a foreign corporation. (B) Controlled group of entities The term controlled group of entities means a controlled group of corporations as defined in section 1563(a)(1), except that— (i) more than 50 percent shall be substituted for at least 80 percent each place it appears therein, and (ii) the determination shall be made without regard to subsections (a)(4) and (b)(2) of section 1563. A partnership or any other entity (other than a corporation) shall be treated as a member of a controlled group of entities if such entity is controlled (within the meaning of section 954(d)(3)) by members of such group (including any entity treated as a member of such group by reason of this sentence). (4) Foreign parent corporation For purposes of this subsection, the term foreign parent corporation means, with respect to any deductible related-party payment, the common parent of the foreign controlled group of entities referred to in paragraph (3)(A). (5) Regulations The Secretary may prescribe such regulations or other guidance as are necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance which provide for— (A) the treatment of two or more persons as members of a foreign controlled group of entities if such persons would be the common parent of such group if treated as one corporation, and (B) the treatment of any member of a foreign controlled group of entities as the common parent of such group if such treatment is appropriate taking into account the economic relationships among such entities. . (b) Effective date The amendment made by this section shall apply to payments made after the date of the enactment of this Act.