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Defending American Jobs and Investment Act · Introduced in House (2025-01-21) · Congress.wiki

H.R. 591

119th CONGRESS 1st Session

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

IN THE HOUSE OF REPRESENTATIVES · January 21, 2025 · Sponsor: Mr. Smith of Missouri

H.R. 591
- Sec. 899. Enforcement of remedies against extraterritorial taxes and discriminatory taxes.

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—
    - 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
    - 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—
    - beginning on the earlier of the date on which such tax is enacted or takes effect, and
    - 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—
  - 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,
  - urge repeal of extraterritorial taxes and discriminatory taxes that target United States persons, and
  - 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 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) For purposes of this subparagraph, the term means— specified rate of income tax
    - the rates of tax specified in paragraphs (1) and (2) of section 871(a),
    - in the case of any applicable person to which section 871(b) applies, each rate of tax in effect under section 1,
    - the rate of tax specified in section 881(a),
    - in the case of any applicable person to which section 882(a) applies, the rate of tax specified in section 11(b), and
    - the rate of tax specified in section 884(a).
    - (iii) 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—
    - the tax which would be imposed under such section (after application of clause (ii)(II)) if FIRPTA items were not taken into account, over
    - 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 means gains and losses taken into account under section 871(b)(1) by reason of section 897(a)(1)(A). FIRPTA items
  - (B) Withholding taxes
    - (i) 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—
    - 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.
    - (ii) 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—
    - 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.
    - (iii) 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—
    - 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,
(d) Definitions
- For purposes of this section—
  - The term 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.
  - The term means— appropriate committees of Congress
  - The term 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.

(2) Other remedies

(A) Procurement
- (i) 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) 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) 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) 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) 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) 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).

H.R. 591

Table of contents

Sec. 899. Enforcement of remedies against extraterritorial taxes and discriminatory taxes.