119-hr591

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 591 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 591

 To provide an enforcement of remedies against the extraterritorial 
 taxes and discriminatory taxes of foreign countries.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 January 21, 2025

 Mr. Smith of Missouri (for himself, Mr. Buchanan, Mr. Smith of 
 Nebraska, Mr. Kelly of Pennsylvania, Mr. Schweikert, Mr. LaHood, Mr. 
Arrington, Mr. Estes, 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, and in addition 
to the Committee on Oversight and Government Reform, for a period to be 
subsequently determined 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 Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

 This Act may be cited as the ``Defending American Jobs and 
Investment Act''.

SEC. 2. ENFORCEMENT OF REMEDIES AGAINST EXTRATERRITORIAL TAXES AND 
 DISCRIMINATORY TAXES.

    (a) In General.--Subpart D of part II of subchapter N of chapter 1 
is amended by adding at the end the following new section:

``

SEC. 899. ENFORCEMENT OF REMEDIES AGAINST EXTRATERRITORIAL TAXES AND 
 DISCRIMINATORY TAXES.

 ``

    (a) Report on Extraterritorial Taxes and Discriminatory Taxes.--
 ``

    (1) In general.--Not later than 90 days after the date of 
 the enactment of this section, and not less frequently than 
 once every 180 days thereafter, the Secretary shall submit to 
 the appropriate committees of Congress a report which lists 
 each foreign country that has (as of the date of the submission 
 of such report) one or more extraterritorial taxes or 
 discriminatory taxes.
 ``

    (2) Additional items.--Each report submitted under 
 paragraph

    (1) shall include--
 ``
        (A) with respect to each extraterritorial tax or 
 discriminatory tax of any foreign country listed in 
 such report, a description of such tax including the 
 rate thereof and the dates on which such tax was 
 enacted and takes effect, and
 ``
        (B) if the Secretary determines that any foreign 
 country no longer has (as of the date of the submission 
 of such report) an extraterritorial tax or 
 discriminatory tax which was described in any prior 
 report submitted under this subsection--
 ``
            (i) the dates on which the permanent 
 repeal or termination of such tax was enacted 
 and takes effect, and
 ``
            (ii) whether such foreign country has (as 
 of such date) any other extraterritorial taxes 
 or discriminatory taxes.
 ``

    (3) Determination of when a foreign country has an 
 extraterritorial tax or discriminatory tax.--For purposes of 
 this section, a foreign country shall be treated as having an 
 extraterritorial tax or discriminatory tax during the period--
 ``
        (A) beginning on the earlier of the date on which 
 such tax is enacted or takes effect, and
 ``
        (B) ending on the later of the date on which the 
 permanent repeal or termination of such tax is enacted 
 or takes effect.
 ``

    (b) Engagement With Trading Partners on Extraterritorial Taxes 
and Discriminatory Taxes.--The Secretary shall commence enhanced 
bilateral engagement with each foreign country included in the report 
submitted under subsection

    (a) , in order to, as appropriate--
 ``

    (1) express the concern of the United States with respect 
 to the adverse trade and economic effects of tax policies that 
 violate bilateral tax treaties and international tax norms,
 ``

    (2) urge repeal of extraterritorial taxes and 
 discriminatory taxes that target United States persons, and
 ``

    (3) advise such foreign country of the remedial actions 
 under subsection
            (c) .
 ``
            (c) Remedial Actions.--
 ``

    (1) Increased rate of tax on foreign citizens and foreign 
 corporations.--
 ``
        (A) Income taxes.--
 ``
            (i) In general.--In the case of any 
 applicable person for any taxable year 
 beginning after the applicable date, each 
 specified rate of income tax shall be increased 
 by the applicable number of percentage points.
 ``
            (ii) Specified rate of income tax.--For 
 purposes of this subparagraph, the term 
 `specified rate of income tax' means--
 ``
            (I) the rates of tax specified in 
 paragraphs

    (1) and

    (2) of 

section 871

    (a) ,
 ``
            (II) in the case of any 
 applicable person to which 

section 871

    (b) applies, each rate of tax in 
 effect under 

section 1,
 ``
            (III) the rate of tax specified 
 in 

section 881

    (a) ,
 ``
            (IV) in the case of any 
 applicable person to which 

section 882

    (a) applies, the rate of tax 
 specified in 

section 11

    (b) , and
 ``
            (V) the rate of tax specified in 
 

section 884

    (a) .
 ``
            (iii) Application of increased rates to 
 effectively connected income of nonresident 
 alien individuals limited to gains on united 
 states real property interests.--In the case of 
 any individual to whom clause
            (i) applies, the 
 tax imposed under 

section 1 on such individual 
 (after application of clause
            (ii) 
            (II) ) shall be 
 reduced (but not below zero) by the excess of--
 ``
            (I) the tax which would be 
 imposed under such section (after 
 application of clause
            (ii) 
            (II) ) if 
 FIRPTA items were not taken into 
 account, over
 ``
            (II) the tax which would be 
 imposed under such section if FIRPTA 
 items were not taken into account, and 
 clause
            (ii) 
            (II) did not apply.
 For purposes of this clause, the term `FIRPTA 
 items' means gains and losses taken into 
 account under 

section 871

    (b)

    (1) by reason of 
 

section 897

    (a)

    (1)
        (A) .
 ``
        (B) Withholding taxes.--
 ``
            (i) In general.--In the case of any 
 payment to an applicable person after the 
 applicable date, the rate of tax specified in 
 sections 1441

    (a) and 1442

    (a) (other than the 14 
 percent rate of tax specified in 

section 1441

    (a) ) shall each be--
 ``
            (I) notwithstanding sections 894 
 and 7852
            (d) , determined without regard 
 to any treaty obligation of the United 
 States, and
 ``
            (II) increased by the applicable 
 number of percentage points.
 ``
            (ii) Disposition of united states real 
 property interests.--In the case of any 
 disposition of a United States real property 
 interest (as defined in 

section 897
            (c) ) by an 
 applicable person after the applicable date, 
 the rate of tax specified in 

section 1445

    (a) shall be--
 ``
            (I) notwithstanding sections 894 
 and 7852
            (d) , determined without regard 
 to any treaty obligation of the United 
 States, and
 ``
            (II) increased by the applicable 
 number of percentage points.
 ``
            (iii) Other dispositions and 
 distributions related to united states real 
 property interests.--In the case of any 
 disposition or distribution described in any 
 paragraph of 

section 1445

    (e) made after the 
 applicable date, each rate of tax in such 
 paragraph shall be (notwithstanding sections 
 894 and 7852
            (d) ) determined without regard to 
 any treaty obligation of the United States and 
 increased by the applicable number of 
 percentage points if--
 ``
            (I) in the case of 

section 1445

    (e)

    (1) , the foreign person referred 
 to in subparagraph
        (A) or
        (B) of such 
 section is an applicable person,
 ``
            (II) in the case of 

section 1445

    (e)

    (2) , the foreign corporation 
 referred to in such section is an 
 applicable person,
 ``
            (III) in the case of 

section 1445

    (e)

    (3) , the foreign shareholder 
 referred to in such section is an 
 applicable person,
 ``
            (IV) in the case of 

section 1445

    (e)

    (4) , the foreign person referred 
 to in such section is an applicable 
 person,
 ``
            (V) in the case of 

section 1445

    (e)

    (5) , the Secretary issues 
 regulations or other guidance providing 
 for such increase, and
 ``
            (VI) in the case of 

section 1445

    (e)

    (6) , the nonresident alien 
 individual or foreign corporation 
 referred to in such section is an 
 applicable person.
 ``
            (C) Applicable person.--For purposes of this 
 paragraph, the term `applicable person' means--
 ``
            (i) any individual (other than a citizen 
 or resident of the United States) who is a 
 citizen of a foreign country listed in a report 
 under subsection

    (a) ,
 ``
            (ii) any foreign corporation (other than 
 a specified 10-percent owned foreign 
 corporation, as defined in 

section 245A

    (b) ) 
 which is created or organized in such a foreign 
 country or subject to the income tax laws of 
 such foreign country, and
 ``
            (iii) in the case of the application of 
 subparagraph
        (B)
            (i) with respect to 

section 1441

    (a) , foreign partnerships to the extent 
 provided by the Secretary (and taking into 
 account the rules of 

section 1441
            (d) ).
 ``
            (D) Applicable date.--For purposes of this 
 paragraph, the term `applicable date' means with 
 respect to any foreign country, the day after the 180-
 day period beginning on the date of the submission of 
 the first report under subsection

    (a) which lists such 
 foreign country.
 ``
        (E) Applicable number of percentage points.--For 
 purposes of this paragraph--
 ``
            (i) In general.--The term `applicable 
 number of percentage points' means, with 
 respect to any foreign country--
 ``
            (I) with respect to the 1-year 
 period beginning on the applicable date 
 with respect to such foreign country, 5 
 percentage points,
 ``
            (II) with respect to the 1-year 
 period beginning with the close of the 
 period described in subclause
            (I) , 10 
 percentage points,
 ``
            (III) with respect to the 1-year 
 period beginning with the close of the 
 period described in subclause
            (II) , 15 
 percentage points, and
 ``
            (IV) with respect to any time 
 after the close of the period described 
 in subclause
            (III) , 20 percentage 
 points.
 ``
            (ii) Application to taxable years.--For 
 purposes of subparagraph
        (A) , the applicable 
 number of percentage points shall be determined 
 with respect to the date on which the taxable 
 year begins.
 ``
            (iii) Application to withholding taxes.--
 For purposes of subparagraph
        (B) , the 
 applicable number of percentage points shall be 
 determined with respect to the date of the 
 payment or disposition, as the case may be.
 ``
        (F) Effect of permanent repeal or termination of 
 extraterritorial and discriminatory taxes.--If the 
 Secretary determines under subsection

    (a)

    (2)
        (B)
            (ii) that any foreign country no longer has any 
 extraterritorial or discriminatory taxes, then in the 
 case of any taxable year beginning, or payment or 
 disposition made, after the date of the submission of 
 the report which includes such determination, this 
 section shall be applied with respect to such foreign 
 country by not taking into account any report submitted 
 before such date.
 ``

    (2) Other remedies.--
 ``
        (A) Procurement.--
 ``
            (i) In general.--The President may 
 prohibit the Federal Government from procuring, 
 or entering into any contract for the 
 procurement of, goods or services from 
 applicable persons during the period beginning 
 on the applicable date and ending on the date 
 of any determination described in paragraph

    (1)
        (F) by the Secretary with respect to such 
 foreign country.
 ``
            (ii) Congressional notification.--If the 
 President takes any action described in clause
            (i) , the President shall, not later than 30 
 days after the date of such action, notify the 
 appropriate committees of Congress of such 
 action.
 ``
        (B) Tax treaties.--
 ``
            (i) In general.--The Secretary shall take 
 into account the extraterritorial taxes and 
 discriminatory taxes of any foreign country in 
 assessing whether to enter into a bilateral tax 
 treaty with such foreign country or to 
 participate in negotiations with respect to 
 updating a bilateral tax treaty with such 
 foreign country.
 ``
            (ii) Congressional notification.--If the 
 Secretary begins negotiations with respect to 
 entering into or updating any bilateral tax 
 treaty with any foreign country that imposes 
 one or more extraterritorial or discriminatory 
 taxes, the Secretary shall, not later than 30 
 days after beginning such negotiations, notify 
 the appropriate committees of Congress of such 
 action. Such notification shall include a 
 description of the manner in which such taxes 
 are being taken into account as required under 
 clause
            (i) .
 ``
            (C) Trade agreements.--
 ``
            (i) In general.--The United States Trade 
 Representative and the Secretary of Commerce 
 shall each take into account the 
 extraterritorial taxes and discriminatory taxes 
 of any foreign government in assessing whether 
 to enter into any free trade agreement or 
 Executive agreement on trade with such foreign 
 country.
 ``
            (ii) Congressional notification.--If the 
 United States Trade Representative or the 
 Secretary of Commerce begins negotiations with 
 respect to entering into any free trade 
 agreement or Executive agreement on trade with 
 any foreign country that imposes one or more 
 extraterritorial or discriminatory taxes, the 
 United States Trade Representative or the 
 Secretary of Commerce (as the case may be) 
 shall, not later than 30 days after beginning 
 such negotiations, notify the appropriate 
 committees of Congress of such action. Such 
 notification shall include a description of the 
 manner in which such taxes are being taken into 
 account as required under clause
            (i) .
 ``
            (d) === Definitions. ===
-For purposes of this section--
 ``

    (1) Extraterritorial tax.--
 ``
        (A) 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.
 ``
        (B) 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.
 ``

    (2) Discriminatory tax.--
 ``
        (A) In general.--Except as otherwise provided in 
 subparagraph
        (B) , the term `discriminatory tax' means 
 any tax imposed by a foreign country if--
 ``
            (i) such tax applies to items of income 
 that would not be considered to be from sources 
 within the foreign country under the rules of 
 part I of this subchapter if such part were 
 applied by treating such foreign country as 
 though it were the United States,
 ``
            (ii) such tax is imposed on a base other 
 than net income and is not computed by 
 permitting recovery of costs and expenses,
 ``
            (iii) such tax is exclusively or 
 predominantly applicable, in practice or by its 
 terms, to nonresident individuals and foreign 
 corporations or partnerships (as determined 
 under rules similar to paragraphs

    (4) and

    (5) of 

section 7701

    (a) by treating the foreign 
 country as though it were the United States) 
 because of the application of revenue 
 thresholds, exemptions or exclusions for 
 taxpayers subject to such foreign country's 
 corporate income tax, or restrictions of scope 
 that ensure that substantially all residents 
 (other than foreign corporations and 
 partnerships (as so determined)) supplying 
 comparable goods or services are excluded from 
 the application of such tax, or
 ``
            (iv) such tax is not treated as an income 
 tax under the laws of such foreign country or 
 is otherwise treated by such foreign country as 
 outside the scope of any agreements that are in 
 force between such foreign country and one or 
 more other jurisdictions for the avoidance of 
 double taxation with respect to taxes on 
 income.
 ``
        (B) Exceptions.--Except as otherwise provided by 
 the Secretary, the term `discriminatory taxes' shall 
 not include any generally applicable tax which 
 constitutes--
 ``
            (i) a withholding tax on amounts 
 described in sections 871

    (a)

    (1) and 881

    (a) ,
 ``
            (ii) a value added tax, goods and 
 services tax, sales tax, or other similar tax 
 on consumption,
 ``
            (iii) a tax imposed with respect to 
 transactions on a per-unit or per-transaction 
 basis rather than on an ad valorem basis,
 ``
            (iv) a tax on real or personal property, 
 or
 ``
            (v) any other similar tax identified by 
 the Secretary for purposes of this 
 subparagraph.
 ``

    (3) Foreign country.--The term `foreign country' means a 
 foreign country or a dependent territory or possession of a 
 foreign country. Such term does not include any possession of 
 the United States.
 ``

    (4) Appropriate committees of congress.--The term 
 `appropriate committees of Congress' means--
 ``
        (A) the Committee on Finance and the Committee on 
 Foreign Relations of the Senate, and
 ``
        (B) the Committee on Foreign Affairs and the 
 Committee on Ways and Means of the House of 
 Representatives.
 ``

    (5) Secretary.--The term `Secretary' means the Secretary 
 of the Treasury or the Secretary's delegate.
 ``

    (e) Regulations and Other Guidance.--The Secretary may issue such 
regulations or other guidance as may be necessary or appropriate to 
carry out the purposes of this section, including regulations or other 
guidance which provide for such adjustments to the application of this 
section as are necessary to prevent the avoidance of the purposes of 
this section.''.

    (b) Clerical Amendment.--The table of sections for subpart D of 
part II of subchapter N of chapter 1 is amended by adding at the end 
the following new item:

``

Sec. 899. Enforcement of remedies against extraterritorial taxes and 
 discriminatory taxes.''.
 <all>