H.R. 1911

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1911 Introduced in House (IH)]

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119th CONGRESS
1st Session
H. R. 1911

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.

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IN THE HOUSE OF REPRESENTATIVES

March 6, 2025

Mr. Conaway (for himself, Mr. Suozzi, and Mr. Van Drew) introduced the 
following bill; which was referred to the Committee on Ways and Means

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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 Representatives 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 
PAYMENTS.

(a) In General.--Section 59A of the Internal Revenue Code of 1986 
is amended by redesignating subsection (i) as subsection (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 establishes to the satisfaction 
of the Secretary that--
``(A) the foreign person to whom such amount is 
paid or incurred is subject to an effective 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 percent.
``(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 established on the basis of applicable financial statements 
(as defined in section 451(b)(3)) with appropriate adjustments 
(as determined by the Secretary) for excluded dividends, net 
tax expense, excluded equity gain or loss, included revaluation 
method gain or loss, gain or loss from intragroup transfers of 
assets 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), including--
``(A) procedures for determining the effective 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 related parties.''.
(c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
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