Unfair Tax Prevention Act

This bill changes how the “base erosion and anti‑abuse tax” (BEAT) applies to certain U.S. companies that are controlled by foreign groups in countries that levy “extraterritorial” taxes. An extraterritorial tax is a foreign tax that looks at profits of related businesses connected by ownership, even if there isn’t direct ownership between them. For these companies, the bill changes how they are tested for BEAT, turns off some current BEAT rules, and treats half of their cost of goods sold as an amount that can trigger the tax. It also sets December 31, 2025, as a specific date used in one of the BEAT calculations for these companies. The changes would start for tax years that begin after the bill becomes law.

Key points

• Who is affected: U.S. companies controlled by foreign entities when the foreign country imposes an extraterritorial tax on the controlling or related foreign entities or their businesses.
• What changes: Adjusts how these companies are tested for BEAT, makes certain BEAT provisions not apply, and counts 50% of cost of goods sold as a BEAT‑triggering amount.
• When: Applies to tax years starting after enactment; uses December 31, 2025, as a key date for a related BEAT rule for these companies.