I
119THCONGRESS
1
STSESSION 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
MARCH27, 2025
Mr. E
STES(for himself, Mr. BUCHANAN, Mr. SMITHof Nebraska, Mr. KELLY
of Pennsylvania, Mr. S
CHWEIKERT, Mr. LAHOOD, Mr. ARRINGTON, Mr.
S
MUCKER, Mr. HERNof Oklahoma, Mrs. MILLERof West Virginia, Mr.
M
URPHY, Mr. KUSTOFF, Mr. FITZPATRICK, Mr. STEUBE, Ms. TENNEY,
Mrs. F
ISCHBACH, Mr. MOOREof Utah, Ms. VANDUYNE, Mr. FEENSTRA,
Ms. M
ALLIOTAKIS, Mr. CAREY, Mr. YAKYM, Mr. MILLERof Ohio, Mr.
B
EANof 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 Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘Unfair Tax Prevention 4
Act’’. 5
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SEC. 2. APPLICATION OF THE BASE EROSION AND ANTI- 1
ABUSE TAX WITH RESPECT TO CERTAIN EN-2
TITIES CONNECTED TO EXTRATERRITORIAL 3
TAX JURISDICTIONS. 4
(a) I
NGENERAL.—Section 59A of the Internal Rev-5
enue Code of 1986 is amended by redesignating subsection 6
(i) as subsection (j) and inserting after subsection (h) the 7
following new subsection: 8
‘‘(i) S
PECIALRULES FOR FOREIGN-OWNED 9
E
XTRATERRITORIALTAXREGIMEENTITIES.— 10
‘‘(1) I
N GENERAL.—In the case of any foreign- 11
owned extraterritorial tax regime entity— 12
‘‘(A) such entity shall be treated as de-13
scribed in subparagraphs (B) and (C) of sub-14
section (e)(1) for purposes of determining 15
whether such entity is an applicable taxpayer, 16
‘‘(B) subsection (b)(2) shall be applied by 17
substituting ‘the date of the enactment of sub-18
section (i)’ for ‘December 31, 2025’, 19
‘‘(C) subsections (c)(2)(B), (c)(4)(B)(ii), 20
and (d)(5) shall not apply, and 21
‘‘(D) 50 percent of such entity’s cost of 22
goods sold shall be treated as a base erosion tax 23
benefit with respect to a base erosion payment. 24
‘‘(2) F
OREIGN-OWNED EXTRATERRITORIAL TAX 25
REGIME ENTITY.—For purposes of this subsection— 26
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‘‘(A) IN GENERAL.—The term ‘foreign- 1
owned extraterritorial tax regime entity’ means 2
any taxpayer which is controlled by a foreign 3
entity (other than a foreign entity controlled by 4
any domestic corporation) if an extraterritorial 5
tax is imposed on any of the following entities: 6
‘‘(i) Any foreign entity which controls 7
the taxpayer. 8
‘‘(ii) Any foreign entity which is con-9
trolled by— 10
‘‘(I) the taxpayer, or 11
‘‘(II) any foreign entity described 12
in clause (i). 13
‘‘(iii) Any trade or business of any 14
foreign entity described in clause (i) or (ii). 15
‘‘(B) E
XTRATERRITORIAL TAX .— 16
‘‘(i) I
N GENERAL .—The term 17
‘extraterritorial tax’ means any tax im-18
posed by a foreign country on a corpora-19
tion (including any trade or business of 20
such corporation) which is determined by 21
reference to any income or profits received 22
by any person (including any trade or busi-23
ness of any person) by reason of such per-24
son being connected to such corporation 25
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through any chain of ownership, deter-1
mined without regard to the ownership in-2
terests of any individual, and other than by 3
reason of such corporation having a direct 4
or indirect ownership interest in such per-5
son. 6
‘‘(ii) T
AX.—The term ‘tax’ includes 7
any increase in tax whether effectuated by 8
an increase in the rate or base of a tax, by 9
a denial of deductions or credits, or other-10
wise. 11
‘‘(C) F
OREIGN ENTITY.—The term ‘foreign 12
entity’ means any foreign person other than an 13
individual. 14
‘‘(D) C
ONTROL.—Control has the same 15
meaning given such term under section 16
954(d)(3).’’. 17
(b) E
FFECTIVEDATE.—The amendment made by 18
this section shall apply to taxable years beginning after 19
the date of the enactment of this Act. 20
Æ
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