I
119THCONGRESS
1
STSESSION H. R. 1911
To amend the Internal Revenue Code of 1986 to provide that certain pay-
ments to foreign related parties subject to sufficient foreign tax are
not treated as base erosion payments.
IN THE HOUSE OF REPRESENTATIVES
MARCH6, 2025
Mr. C
ONAWAY(for himself, Mr. SUOZZI, and Mr. VANDREW) 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 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 Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. CERTAIN PAYMENTS TO FOREIGN RELATED 3
PARTIES SUBJECT TO SUFFICIENT FOREIGN 4
TAX NOT TREATED AS BASE EROSION PAY-5
MENTS. 6
(a) I
NGENERAL.—Section 59A of the Internal Rev-7
enue Code of 1986 is amended by redesignating subsection 8
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(i) as subsection (j) and by inserting after subsection (h) 1
the following new subsection: 2
‘‘(i) C
ERTAINPAYMENTS TO FOREIGNRELATED 3
P
ARTIESSUBJECT TOSUFFICIENTFOREIGNTAXNOT 4
T
REATED ASBASEEROSIONPAYMENTS.— 5
‘‘(1) I
N GENERAL.—An amount shall not be 6
treated as a base erosion payment if the taxpayer es-7
tablishes to the satisfaction of the Secretary that— 8
‘‘(A) the foreign person to whom such 9
amount is paid or incurred is subject to an ef-10
fective rate of foreign income tax of at least 15 11
percent, and 12
‘‘(B) such amount is subject to an effective 13
rate of foreign income tax of at least 15 per-14
cent. 15
‘‘(2) D
ETERMINATION OF EFFECTIVE RATE ON 16
BASIS OF APPLICABLE FINANCIAL STATEMENTS .— 17
Except as otherwise provided by the Secretary, the 18
effective rate of foreign income tax may be estab-19
lished on the basis of applicable financial statements 20
(as defined in section 451(b)(3)) with appropriate 21
adjustments (as determined by the Secretary) for ex-22
cluded dividends, net tax expense, excluded equity 23
gain or loss, included revaluation method gain or 24
loss, gain or loss from intragroup transfers of assets 25
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and liabilities, asymmetric foreign currency gains or 1
losses, bribes, illegal payments, large penalties, prior 2
period errors and changes in accounting methods, 3
accrued pension expenses, and such other items as 4
the Secretary may provide. 5
‘‘(3) F
OREIGN INCOME TAX .—For purposes of 6
this subsection, the term ‘‘foreign income taxes’’ 7
means any income, war profits, or excess profits 8
taxes paid or accrued to any foreign country or to 9
any possession of the United States.’’. 10
(b) R
EGULATIONS.—Section 59A(j) of such Code, as 11
redesignated by subsection (a), is amended by striking 12
‘‘and’’ at the end of paragraph (1), by striking the period 13
at the end of paragraph (2) and inserting ‘‘, and’’, and 14
by adding at the end the following new paragraph: 15
‘‘(3) for the application of subsection (i), in-16
cluding— 17
‘‘(A) procedures for determining the effec-18
tive rate of foreign income tax, and 19
‘‘(B) rules to the prevent tax avoidance or 20
abuse, including rules for recharacterizing a 21
transaction or series of transactions among re-22
lated parties.’’. 23
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(c) EFFECTIVEDATE.—The amendments made by 1
this section shall apply to taxable years beginning after 2
the date of the enactment of this Act. 3
Æ
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