H.R. 2423

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2423 Introduced in House (IH)]

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119th CONGRESS
1st Session
H. R. 2423

To amend the Internal Revenue Code of 1986 to modify the application of 
the base erosion and anti-abuse tax with respect to certain entities 
connected to jurisdictions which have implemented an extraterritorial 
tax.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

March 27, 2025

Mr. Estes (for himself, Mr. Buchanan, Mr. Smith of Nebraska, Mr. Kelly 
of Pennsylvania, Mr. Schweikert, Mr. LaHood, Mr. Arrington, Mr. 
Smucker, Mr. Hern of Oklahoma, Mrs. Miller of West Virginia, Mr. 
Murphy, Mr. Kustoff, Mr. Fitzpatrick, Mr. Steube, Ms. Tenney, Mrs. 
Fischbach, Mr. Moore of Utah, Ms. Van Duyne, Mr. Feenstra, Ms. 
Malliotakis, Mr. Carey, Mr. Yakym, Mr. Miller of Ohio, Mr. Bean of 
Florida, and Mr. Moran) 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 modify the application of 
the base erosion and anti-abuse tax with respect to certain entities 
connected to jurisdictions which have implemented an extraterritorial 
tax.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Unfair Tax Prevention Act''.

SEC. 2. APPLICATION OF THE BASE EROSION AND ANTI-ABUSE TAX WITH RESPECT 
TO CERTAIN ENTITIES CONNECTED TO EXTRATERRITORIAL TAX 
JURISDICTIONS.

(a) In General.--Section 59A of the Internal Revenue Code of 1986 
is amended by redesignating subsection (i) as subsection (j) and 
inserting after subsection (h) the following new subsection:
``(i) Special Rules for Foreign-Owned Extraterritorial Tax Regime 
Entities.--
``(1) In general.--In the case of any foreign-owned 
extraterritorial tax regime entity--
``(A) such entity shall be treated as described in 
subparagraphs (B) and (C) of subsection (e)(1) for 
purposes of determining whether such entity is an 
applicable taxpayer,
``(B) subsection (b)(2) shall be applied by 
substituting `the date of the enactment of subsection 
(i)' for `December 31, 2025',
``(C) subsections (c)(2)(B), (c)(4)(B)(ii), and 
(d)(5) shall not apply, and
``(D) 50 percent of such entity's cost of goods 
sold shall be treated as a base erosion tax benefit 
with respect to a base erosion payment.
``(2) Foreign-owned extraterritorial tax regime entity.--
For purposes of this subsection--
``(A) In general.--The term `foreign-owned 
extraterritorial tax regime entity' means any taxpayer 
which is controlled by a foreign entity (other than a 
foreign entity controlled by any domestic corporation) 
if an extraterritorial tax is imposed on any of the 
following entities:
``(i) Any foreign entity which controls the 
taxpayer.
``(ii) Any foreign entity which is 
controlled by--
``(I) the taxpayer, or
``(II) any foreign entity described 
in clause (i).
``(iii) Any trade or business of any 
foreign entity described in clause (i) or (ii).
``(B) Extraterritorial tax.--
``(i) In general.--The term 
`extraterritorial tax' means any tax imposed by 
a foreign country on a corporation (including 
any trade or business of such corporation) 
which is determined by reference to any income 
or profits received by any person (including 
any trade or business of any person) by reason 
of such person being connected to such 
corporation through any chain of ownership, 
determined without regard to the ownership 
interests of any individual, and other than by 
reason of such corporation having a direct or 
indirect ownership interest in such person.
``(ii) Tax.--The term `tax' includes any 
increase in tax whether effectuated by an 
increase in the rate or base of a tax, by a 
denial of deductions or credits, or otherwise.
``(C) Foreign entity.--The term `foreign entity' 
means any foreign person other than an individual.
``(D) Control.--Control has the same meaning given 
such term under section 954(d)(3).''.
(b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.
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