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.

This bill changes how certain cross‑border payments are treated under U.S. tax rules. If a U.S. company pays a related company in another country, and both the foreign company and the specific payment face at least a 15% foreign income tax, that payment would not count as a “base erosion” payment under current law. Companies can use their applicable financial statements, with adjustments set by the Treasury, to show the foreign tax rate. The Treasury must also issue rules on how to measure the rate and prevent loopholes or abusive transactions among related parties. These changes would start for tax years that begin after the bill becomes law.

Key points:

• Who is affected: U.S. companies that make payments to related companies overseas.
• What changes: Payments taxed at least 15% abroad (both the recipient and the payment itself) would not be treated as base erosion payments in the U.S..
• How it’s verified: Companies may rely on financial statements, with Treasury‑set adjustments, to prove the effective foreign tax rate; Treasury will set anti‑abuse rules.
• When it starts: For tax years beginning after enactment.