I
119THCONGRESS
1
STSESSION H. R. 591
To provide an enforcement of remedies against the extraterritorial taxes
and discriminatory taxes of foreign countries.
IN THE HOUSE OF REPRESENTATIVES
JANUARY21, 2025
Mr. S
MITHof Missouri (for himself, Mr. BUCHANAN, Mr. SMITHof Nebraska,
Mr. K
ELLYof Pennsylvania, Mr. SCHWEIKERT, Mr. LAHOOD, Mr.
A
RRINGTON, Mr. ESTES, Mr. SMUCKER, Mr. HERNof Oklahoma, Mrs.
M
ILLERof West Virginia, Mr. MURPHY, Mr. KUSTOFF, Mr.
F
ITZPATRICK, Mr. STEUBE, Ms. TENNEY, Mrs. FISCHBACH, Mr. MOORE
of Utah, Ms. V
ANDUYNE, Mr. FEENSTRA, Ms. MALLIOTAKIS, Mr.
C
AREY, Mr. YAKYM, Mr. MILLERof Ohio, Mr. BEANof Florida, and Mr.
M
ORAN) introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committee on Over-
sight and Government Reform, for a period to be subsequently deter-
mined by the Speaker, in each case for consideration of such provisions
as fall within the jurisdiction of the committee concerned
A BILL
To provide an enforcement of remedies against the
extraterritorial taxes and discriminatory taxes of foreign
countries.
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 ‘‘Defending American 4
Jobs and Investment Act’’. 5
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SEC. 2. ENFORCEMENT OF REMEDIES AGAINST 1
EXTRATERRITORIAL TAXES AND DISCRIMINA-2
TORY TAXES. 3
(a) I
NGENERAL.—Subpart D of part II of sub-4
chapter N of chapter 1 is amended by adding at the end 5
the following new section: 6
‘‘SEC. 899. ENFORCEMENT OF REMEDIES AGAINST 7
EXTRATERRITORIAL TAXES AND DISCRIMINA-8
TORY TAXES. 9
‘‘(a) R
EPORT ONEXTRATERRITORIAL TAXES AND 10
D
ISCRIMINATORYTAXES.— 11
‘‘(1) I
N GENERAL.—Not later than 90 days 12
after the date of the enactment of this section, and 13
not less frequently than once every 180 days there-14
after, the Secretary shall submit to the appropriate 15
committees of Congress a report which lists each 16
foreign country that has (as of the date of the sub-17
mission of such report) one or more extraterritorial 18
taxes or discriminatory taxes. 19
‘‘(2) A
DDITIONAL ITEMS.—Each report sub-20
mitted under paragraph (1) shall include— 21
‘‘(A) with respect to each extraterritorial 22
tax or discriminatory tax of any foreign country 23
listed in such report, a description of such tax 24
including the rate thereof and the dates on 25
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which such tax was enacted and takes effect, 1
and 2
‘‘(B) if the Secretary determines that any 3
foreign country no longer has (as of the date of 4
the submission of such report) an 5
extraterritorial tax or discriminatory tax which 6
was described in any prior report submitted 7
under this subsection— 8
‘‘(i) the dates on which the permanent 9
repeal or termination of such tax was en-10
acted and takes effect, and 11
‘‘(ii) whether such foreign country has 12
(as of such date) any other extraterritorial 13
taxes or discriminatory taxes. 14
‘‘(3) D
ETERMINATION OF WHEN A FOREIGN 15
COUNTRY HAS AN EXTRATERRITORIAL TAX OR DIS -16
CRIMINATORY TAX.—For purposes of this section, a 17
foreign country shall be treated as having an 18
extraterritorial tax or discriminatory tax during the 19
period— 20
‘‘(A) beginning on the earlier of the date 21
on which such tax is enacted or takes effect, 22
and 23
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‘‘(B) ending on the later of the date on 1
which the permanent repeal or termination of 2
such tax is enacted or takes effect. 3
‘‘(b) E
NGAGEMENT WITHTRADINGPARTNERS ON 4
E
XTRATERRITORIAL TAXES AND DISCRIMINATORY 5
T
AXES.—The Secretary shall commence enhanced bilat-6
eral engagement with each foreign country included in the 7
report submitted under subsection (a), in order to, as ap-8
propriate— 9
‘‘(1) express the concern of the United States 10
with respect to the adverse trade and economic ef-11
fects of tax policies that violate bilateral tax treaties 12
and international tax norms, 13
‘‘(2) urge repeal of extraterritorial taxes and 14
discriminatory taxes that target United States per-15
sons, and 16
‘‘(3) advise such foreign country of the remedial 17
actions under subsection (c). 18
‘‘(c) R
EMEDIALACTIONS.— 19
‘‘(1) I
NCREASED RATE OF TAX ON FOREIGN 20
CITIZENS AND FOREIGN CORPORATIONS .— 21
‘‘(A) I
NCOME TAXES.— 22
‘‘(i) I
N GENERAL.—In the case of any 23
applicable person for any taxable year be-24
ginning after the applicable date, each 25
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specified rate of income tax shall be in-1
creased by the applicable number of per-2
centage points. 3
‘‘(ii) S
PECIFIED RATE OF INCOME 4
TAX.—For purposes of this subparagraph, 5
the term ‘specified rate of income tax’ 6
means— 7
‘‘(I) the rates of tax specified in 8
paragraphs (1) and (2) of section 9
871(a), 10
‘‘(II) in the case of any applica-11
ble person to which section 871(b) ap-12
plies, each rate of tax in effect under 13
section 1, 14
‘‘(III) the rate of tax specified in 15
section 881(a), 16
‘‘(IV) in the case of any applica-17
ble person to which section 882(a) ap-18
plies, the rate of tax specified in sec-19
tion 11(b), and 20
‘‘(V) the rate of tax specified in 21
section 884(a). 22
‘‘(iii) A
PPLICATION OF INCREASED 23
RATES TO EFFECTIVELY CONNECTED IN -24
COME OF NONRESIDENT ALIEN INDIVID -25
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UALS LIMITED TO GAINS ON UNITED 1
STATES REAL PROPERTY INTERESTS .—In 2
the case of any individual to whom clause 3
(i) applies, the tax imposed under section 4
1 on such individual (after application of 5
clause (ii)(II)) shall be reduced (but not 6
below zero) by the excess of— 7
‘‘(I) the tax which would be im-8
posed under such section (after appli-9
cation of clause (ii)(II)) if FIRPTA 10
items were not taken into account, 11
over 12
‘‘(II) the tax which would be im-13
posed under such section if FIRPTA 14
items were not taken into account, 15
and clause (ii)(II) did not apply. 16
For purposes of this clause, the term 17
‘FIRPTA items’ means gains and losses 18
taken into account under section 871(b)(1) 19
by reason of section 897(a)(1)(A). 20
‘‘(B) W
ITHHOLDING TAXES.— 21
‘‘(i) I
N GENERAL.—In the case of any 22
payment to an applicable person after the 23
applicable date, the rate of tax specified in 24
sections 1441(a) and 1442(a) (other than 25
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the 14 percent rate of tax specified in sec-1
tion 1441(a)) shall each be— 2
‘‘(I) notwithstanding sections 894 3
and 7852(d), determined without re-4
gard to any treaty obligation of the 5
United States, and 6
‘‘(II) increased by the applicable 7
number of percentage points. 8
‘‘(ii) D
ISPOSITION OF UNITED STATES 9
REAL PROPERTY INTERESTS .—In the case 10
of any disposition of a United States real 11
property interest (as defined in section 12
897(c)) by an applicable person after the 13
applicable date, the rate of tax specified in 14
section 1445(a) shall be— 15
‘‘(I) notwithstanding sections 894 16
and 7852(d), determined without re-17
gard to any treaty obligation of the 18
United States, and 19
‘‘(II) increased by the applicable 20
number of percentage points. 21
‘‘(iii) O
THER DISPOSITIONS AND DIS -22
TRIBUTIONS RELATED TO UNITED STATES 23
REAL PROPERTY INTERESTS .—In the case 24
of any disposition or distribution described 25
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in any paragraph of section 1445(e) made 1
after the applicable date, each rate of tax 2
in such paragraph shall be (notwith-3
standing sections 894 and 7852(d)) deter-4
mined without regard to any treaty obliga-5
tion of the United States and increased by 6
the applicable number of percentage points 7
if— 8
‘‘(I) in the case of section 9
1445(e)(1), the foreign person re-10
ferred to in subparagraph (A) or (B) 11
of such section is an applicable per-12
son, 13
‘‘(II) in the case of section 14
1445(e)(2), the foreign corporation re-15
ferred to in such section is an applica-16
ble person, 17
‘‘(III) in the case of section 18
1445(e)(3), the foreign shareholder 19
referred to in such section is an appli-20
cable person, 21
‘‘(IV) in the case of section 22
1445(e)(4), the foreign person re-23
ferred to in such section is an applica-24
ble person, 25
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‘‘(V) in the case of section 1
1445(e)(5), the Secretary issues regu-2
lations or other guidance providing for 3
such increase, and 4
‘‘(VI) in the case of section 5
1445(e)(6), the nonresident alien indi-6
vidual or foreign corporation referred 7
to in such section is an applicable per-8
son. 9
‘‘(C) A
PPLICABLE PERSON.—For purposes 10
of this paragraph, the term ‘applicable person’ 11
means— 12
‘‘(i) any individual (other than a cit-13
izen or resident of the United States) who 14
is a citizen of a foreign country listed in a 15
report under subsection (a), 16
‘‘(ii) any foreign corporation (other 17
than a specified 10-percent owned foreign 18
corporation, as defined in section 245A(b)) 19
which is created or organized in such a 20
foreign country or subject to the income 21
tax laws of such foreign country, and 22
‘‘(iii) in the case of the application of 23
subparagraph (B)(i) with respect to section 24
1441(a), foreign partnerships to the extent 25
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provided by the Secretary (and taking into 1
account the rules of section 1441(d)). 2
‘‘(D) A
PPLICABLE DATE.—For purposes of 3
this paragraph, the term ‘applicable date’ 4
means with respect to any foreign country, the 5
day after the 180-day period beginning on the 6
date of the submission of the first report under 7
subsection (a) which lists such foreign country. 8
‘‘(E) A
PPLICABLE NUMBER OF PERCENT -9
AGE POINTS.—For purposes of this para-10
graph— 11
‘‘(i) I
N GENERAL.—The term ‘applica-12
ble number of percentage points’ means, 13
with respect to any foreign country— 14
‘‘(I) with respect to the 1-year 15
period beginning on the applicable 16
date with respect to such foreign 17
country, 5 percentage points, 18
‘‘(II) with respect to the 1-year 19
period beginning with the close of the 20
period described in subclause (I), 10 21
percentage points, 22
‘‘(III) with respect to the 1-year 23
period beginning with the close of the 24
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period described in subclause (II), 15 1
percentage points, and 2
‘‘(IV) with respect to any time 3
after the close of the period described 4
in subclause (III), 20 percentage 5
points. 6
‘‘(ii) A
PPLICATION TO TAXABLE 7
YEARS.—For purposes of subparagraph 8
(A), the applicable number of percentage 9
points shall be determined with respect to 10
the date on which the taxable year begins. 11
‘‘(iii) A
PPLICATION TO WITHHOLDING 12
TAXES.—For purposes of subparagraph 13
(B), the applicable number of percentage 14
points shall be determined with respect to 15
the date of the payment or disposition, as 16
the case may be. 17
‘‘(F) E
FFECT OF PERMANENT REPEAL OR 18
TERMINATION OF EXTRATERRITORIAL AND DIS -19
CRIMINATORY TAXES .—If the Secretary deter-20
mines under subsection (a)(2)(B)(ii) that any 21
foreign country no longer has any 22
extraterritorial or discriminatory taxes, then in 23
the case of any taxable year beginning, or pay-24
ment or disposition made, after the date of the 25
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submission of the report which includes such 1
determination, this section shall be applied with 2
respect to such foreign country by not taking 3
into account any report submitted before such 4
date. 5
‘‘(2) O
THER REMEDIES.— 6
‘‘(A) P
ROCUREMENT.— 7
‘‘(i) I
N GENERAL.—The President 8
may prohibit the Federal Government from 9
procuring, or entering into any contract for 10
the procurement of, goods or services from 11
applicable persons during the period begin-12
ning on the applicable date and ending on 13
the date of any determination described in 14
paragraph (1)(F) by the Secretary with re-15
spect to such foreign country. 16
‘‘(ii) C
ONGRESSIONAL NOTIFICA -17
TION.—If the President takes any action 18
described in clause (i), the President shall, 19
not later than 30 days after the date of 20
such action, notify the appropriate commit-21
tees of Congress of such action. 22
‘‘(B) T
AX TREATIES.— 23
‘‘(i) I
N GENERAL.—The Secretary 24
shall take into account the extraterritorial 25
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taxes and discriminatory taxes of any for-1
eign country in assessing whether to enter 2
into a bilateral tax treaty with such foreign 3
country or to participate in negotiations 4
with respect to updating a bilateral tax 5
treaty with such foreign country. 6
‘‘(ii) C
ONGRESSIONAL NOTIFICA -7
TION.—If the Secretary begins negotia-8
tions with respect to entering into or up-9
dating any bilateral tax treaty with any 10
foreign country that imposes one or more 11
extraterritorial or discriminatory taxes, the 12
Secretary shall, not later than 30 days 13
after beginning such negotiations, notify 14
the appropriate committees of Congress of 15
such action. Such notification shall include 16
a description of the manner in which such 17
taxes are being taken into account as re-18
quired under clause (i). 19
‘‘(C) T
RADE AGREEMENTS .— 20
‘‘(i) I
N GENERAL.—The United States 21
Trade Representative and the Secretary of 22
Commerce shall each take into account the 23
extraterritorial taxes and discriminatory 24
taxes of any foreign government in assess-25
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ing whether to enter into any free trade 1
agreement or Executive agreement on 2
trade with such foreign country. 3
‘‘(ii) C
ONGRESSIONAL NOTIFICA -4
TION.—If the United States Trade Rep-5
resentative or the Secretary of Commerce 6
begins negotiations with respect to enter-7
ing into any free trade agreement or Exec-8
utive agreement on trade with any foreign 9
country that imposes one or more 10
extraterritorial or discriminatory taxes, the 11
United States Trade Representative or the 12
Secretary of Commerce (as the case may 13
be) shall, not later than 30 days after be-14
ginning such negotiations, notify the ap-15
propriate committees of Congress of such 16
action. Such notification shall include a de-17
scription of the manner in which such 18
taxes are being taken into account as re-19
quired under clause (i). 20
‘‘(d) D
EFINITIONS.—For purposes of this section— 21
‘‘(1) E
XTRATERRITORIAL TAX .— 22
‘‘(A) I
N GENERAL .—The term 23
‘extraterritorial tax’ means any tax imposed by 24
a foreign country on a corporation (including 25
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any trade or business of such corporation) 1
which is determined by reference to any income 2
or profits received by any person (including any 3
trade or business of any person) by reason of 4
such person being connected to such corpora-5
tion through any chain of ownership, deter-6
mined without regard to the ownership interests 7
of any individual, and other than by reason of 8
such corporation having a direct or indirect 9
ownership interest in such person. 10
‘‘(B) T
AX.—The term ‘tax’ includes any 11
increase in tax whether effectuated by an in-12
crease in the rate or base of a tax, by a denial 13
of deductions or credits, or otherwise. 14
‘‘(2) D
ISCRIMINATORY TAX.— 15
‘‘(A) I
N GENERAL.—Except as otherwise 16
provided in subparagraph (B), the term ‘dis-17
criminatory tax’ means any tax imposed by a 18
foreign country if— 19
‘‘(i) such tax applies to items of in-20
come that would not be considered to be 21
from sources within the foreign country 22
under the rules of part I of this subchapter 23
if such part were applied by treating such 24
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foreign country as though it were the 1
United States, 2
‘‘(ii) such tax is imposed on a base 3
other than net income and is not computed 4
by permitting recovery of costs and ex-5
penses, 6
‘‘(iii) such tax is exclusively or pre-7
dominantly applicable, in practice or by its 8
terms, to nonresident individuals and for-9
eign corporations or partnerships (as de-10
termined under rules similar to paragraphs 11
(4) and (5) of section 7701(a) by treating 12
the foreign country as though it were the 13
United States) because of the application 14
of revenue thresholds, exemptions or exclu-15
sions for taxpayers subject to such foreign 16
country’s corporate income tax, or restric-17
tions of scope that ensure that substan-18
tially all residents (other than foreign cor-19
porations and partnerships (as so deter-20
mined)) supplying comparable goods or 21
services are excluded from the application 22
of such tax, or 23
‘‘(iv) such tax is not treated as an in-24
come tax under the laws of such foreign 25
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country or is otherwise treated by such for-1
eign country as outside the scope of any 2
agreements that are in force between such 3
foreign country and one or more other ju-4
risdictions for the avoidance of double tax-5
ation with respect to taxes on income. 6
‘‘(B) E
XCEPTIONS.—Except as otherwise 7
provided by the Secretary, the term ‘discrimina-8
tory taxes’ shall not include any generally appli-9
cable tax which constitutes— 10
‘‘(i) a withholding tax on amounts de-11
scribed in sections 871(a)(1) and 881(a), 12
‘‘(ii) a value added tax, goods and 13
services tax, sales tax, or other similar tax 14
on consumption, 15
‘‘(iii) a tax imposed with respect to 16
transactions on a per-unit or per-trans-17
action basis rather than on an ad valorem 18
basis, 19
‘‘(iv) a tax on real or personal prop-20
erty, or 21
‘‘(v) any other similar tax identified 22
by the Secretary for purposes of this sub-23
paragraph. 24
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‘‘(3) FOREIGN COUNTRY .—The term ‘foreign 1
country’ means a foreign country or a dependent 2
territory or possession of a foreign country. Such 3
term does not include any possession of the United 4
States. 5
‘‘(4) A
PPROPRIATE COMMITTEES OF CON -6
GRESS.—The term ‘appropriate committees of Con-7
gress’ means— 8
‘‘(A) the Committee on Finance and the 9
Committee on Foreign Relations of the Senate, 10
and 11
‘‘(B) the Committee on Foreign Affairs 12
and the Committee on Ways and Means of the 13
House of Representatives. 14
‘‘(5) S
ECRETARY.—The term ‘Secretary’ means 15
the Secretary of the Treasury or the Secretary’s del-16
egate. 17
‘‘(e) R
EGULATIONS AND OTHERGUIDANCE.—The 18
Secretary may issue such regulations or other guidance 19
as may be necessary or appropriate to carry out the pur-20
poses of this section, including regulations or other guid-21
ance which provide for such adjustments to the application 22
of this section as are necessary to prevent the avoidance 23
of the purposes of this section.’’. 24
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(b) CLERICALAMENDMENT.—The table of sections 1
for subpart D of part II of subchapter N of chapter 1 2
is amended by adding at the end the following new item: 3
‘‘Sec. 899. Enforcement of remedies against extraterritorial taxes and discrimi-
natory taxes.’’.
Æ
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