Us Congress House Bill HB5109

Us Congress 2023-2024 Regular Session

• Introduced: 8/1/23
• Refer: 8/1/23

Caption

DITCH Act Dump Investments in Troublesome Communist Holdings Act

Impact

If enacted, HB 5109 would have considerable implications for tax-exempt organizations, including charities, educational institutions, and other non-profits, limiting their ability to invest in companies that may pose risks to U.S. interests. Organizations would need to conduct thorough due diligence and maintain compliance with new reporting requirements detailed in the bill. Moreover, they would be subjected to a waiver application process if they wish to invest in disqualified entities, which would require justification that their investment outweighs potential national security threats.

Summary

House Bill 5109, known as the 'Dump Investments in Troublesome Communist Holdings Act' (DITCH Act), aims to impose strict limitations on investment by tax-exempt entities in companies incorporated in China or significantly controlled by Chinese interests. The bill outlines definitions for what constitutes a 'disqualified Chinese company' and establishes criteria under which tax-exempt organizations would lose their status if they hold interests in such companies. This legislation seeks to mitigate perceived threats to U.S. national security stemming from foreign investments, specifically highlighting concerns about the influence of the Chinese Communist Party.

Contention

Critics of HB 5109 express concerns that the bill could stifle legitimate investment opportunities and hinder the operations of non-profit organizations that depend on a diverse portfolio for financial support. There are fears that the waiver system could create bureaucratic hurdles, dissuading organizations from making beneficial investments due to the complexities involved. Supporters argue that these measures are necessary for safeguarding U.S. interests and aligning investment practices with national security priorities.