,i #aafth ,,congress #b;d ,session ,h4 ,r4 #hfdf ,,in ,,the ,,house ,,of ,,representatives ,october #bj1 #bjbj,mr4 ,suozzi 7for himself and ,ms4 ,velzquez7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to provide a credit for economic activity in possessions of the ,united ,states4 #a4 ,short title ,this ,act may be cited as the ,territory ,economic ,development ,tax ,credit ,act4 #b4 ,credit for economic activity in possessions of the ,united ,states 7a7 ,in general ,subpart ,b of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #cj;,e4 ,possession economic activity credit 7a7 ,allowance of credit 7#a7 ,in general ,except as otherwise provided in this section1 in the case of a qualified domestic corporation1 there shall be allowed as a credit against the tax imposed by this chapter an amount equal to the amount determined under paragraph 7#b74 7#b7 ,determination of amount ,the amount determined under this paragraph is-- 7,a7 in the case of a qualified domestic corporation described in subsection 7b77#a77;,a71 the lesser of-- 7i7 the portion of the tax which is attributable to the taxable income1 from sources without the ,united ,states1 from-- 7,i7 the active conduct of a trade or business within a possession of the ,united ,states1 or 7,,ii7 the sale or exchange of substantially all of the assets used by the taxpayer in the active conduct of such trade or business1 or 7ii7 the wage and asset limitation with respect to such corporation1 and 7,b7 in the case of a qualified domestic corporation described in subsection 7b77#a77;,b71 the lesser of-- 7i7 the intangible low-taxed income tax amount1 or 7ii7 the sum of the qualified domestic corporation's pro rata share 7determined in a manner similar to the manner provided in section #iea;,a7e77#a77 of the wage and asset limitations with respect to each foreign qualified corporation of which such qualified domestic corporation is a ,united ,states shareholder4 7b7 ,qualified domestic corporation2 qualified corporation ,for purposes of this section-- 7#a7 ,in general ,the term qualified domestic corporation means any domestic corporation which is-- 7,a7 a qualified corporation1 or 7,b7 a ,united ,states shareholder of a foreign corporation which-- 7i7 is a qualified corporation1 and 7ii7 is wholly owned by corporations which are members of the same affiliated group as such ,united ,states shareholder4 7#b7 ,qualified corporation ,the term qualified corporation means any corporation if such corporation meets the following requirements3 7,a7 ,source qualification #hj percent or more of the gross income of the corporation for the #c-year period immediately preceding the close of the taxable year 7or for such part of such period immediately preceding the close of such taxable year as may be applicable7 was derived from sources within a possession of the ,united ,states 7determined without regard to section #ijd7;f774 7,b7 ,trade or business qualification #ge percent or more of the gross income of the corporation for such period or such part thereof was derived from the active conduct of a trade or business within a possession of the ,united ,states4 7#c7 ,special rule for separate and clearly identified units of foreign corporations 7,a7 ,in general ,in the case of a ,united ,states shareholder of a foreign corporation which-- 7i7 is not a qualified corporation but with respect to which the ownership requirements of paragraph 7#a77;,b77ii7 are met1 and 7ii7 has an eligible foreign business unit which1 if such unit were a corporation1 would be a qualified corporation with respect to which such ownership requirements would be met1 then1 for purposes of this section1 the ,united ,states shareholder may elect to treat such unit as a separate foreign corporation which meets the requirements of paragraph 7#a77;,b7 and with respect to which such shareholder is a ,united ,states shareholder4 7,b7 ,eligible foreign business unit ,for purposes of this paragraph1 the term eligible foreign business unit means a separate and clearly identified foreign unit of a trade or business1 including a partnership or an entity treated as disregarded as a separate entity from its owner 7under section #ggja or other provision under this title71 which maintains separate books and records4 7,c7 ,special election for affiliated groups ,in the case of an affiliated group described in paragraph 7#a77;,b77ii71 the election under subparagraph 7,a7 with respect to any eligible foreign business unit shall be made by the common parent of such group and shall apply uniformly to all members of such group which are ,united ,states shareholders with respect to the foreign corporation which has such unit4 7c7 ,wage and asset limitation 7#a7 ,in general ,the wage and asset limitation with respect to any qualified corporation for any taxable year is an amount equal to the sum of the following amounts3 7,a7 #dj percent of the sum of-- 7i7 the aggregate amount of the qualified corporation's qualified possession wages for such taxable year1 plus 7ii7 the allocable employee fringe benefit expenses of the qualified corporation for such taxable year4 7,b7 #be percent of the depreciation allowances for the taxable year with respect to qualified tangible property4 7,c7 ,in the case of a qualified domestic corporation described in subsection 7b77#a77;,a71 the amount of the possession income taxes for the taxable year attributable to income described in subsection 7a77#b77;,a77i74 7#b7 ,qualified possession wages ,for purposes of this section-- 7,a7 ,in general ,the term qualified possession wages means wages paid or incurred by the qualified corporation during the taxable year in connection with the active conduct of a trade or business within a possession of the ,united ,states to any employee for services performed in such possession1 but only if such services are performed while the principal place of employment of such employee is within such possession4 7,b7 ,limitation on amount of wages taken into account 7i7 ,in general ,the amount of wages which may be taken into account under subparagraph 7,a7 with respect to any employee for any taxable year shall not exceed the contribution and benefit base determined under section #bcj of the ,social ,security ,act for the calendar year in which such taxable year begins4 7ii7 ,treatment of part-time employees1 etc ,if-- 7,i7 any employee is not employed by the qualified corporation on a substantially full-time basis at all times during the taxable year1 or 7,,ii7 the principal place of employment of any employee with the qualified corporation is not within a possession at all times during the taxable year1 the limitation applicable under clause 7i7 with respect to such employee shall be the appropriate portion 7as determined by the ,secretary7 of the limitation which would otherwise be in effect under clause 7i74 7,c7 ,treatment of certain employees ,the term qualified possession wages shall not include any wages paid to employees who are assigned by the employer to perform services for another person1 unless the principal trade or business of the employer is to make employees available for temporary periods to other persons in return for compensation4 ,all qualified corporations treated as #a corporation under subsection 7f77#a7 shall be treated as #a employer for purposes of the preceding sentence4 7,d7 ,wages 7i7 ,in general ,except as provided in clause 7ii71 the term wages has the meaning given to such term by subsection 7b7 of section #ccjf 7determined without regard to any dollar limitation contained in such section74 ,for purposes of the preceding sentence1 such subsection 7b7 shall be applied as if the term ,united ,states included all possessions of the ,united ,states4 7ii7 ,special rule for agricultural labor and railway labor ,in any case to which subparagraph 7,a7 or 7,b7 of paragraph 7#a7 of section #ea7;h7 applies1 the term wages has the meaning given to such term by section #ea7;h77#b74 7#c7 ,allocable employee fringe benefit expenses 7,a7 ,in general ,the allocable employee fringe benefit expenses of any qualified corporation for any taxable year is an amount which bears the same ratio to the amount determined under subparagraph 7,b7 for such taxable year as-- 7i7 the aggregate amount of the qualified corporation's qualified possession wages for such taxable year1 bears to 7ii7 the aggregate amount of the wages paid or incurred by such qualified corporation during such taxable year4 ,in no event shall the amount determined under the preceding sentence exceed #ae percent of the amount referred to in clause 7i74 7,b7 ,expenses taken into account ,for purposes of subparagraph 7,a71 the amount determined under this subparagraph for any taxable year is the aggregate amount allowable 7or1 in the case of a foreign corporation1 which would be allowable if such foreign corporation were a domestic corporation7 as a deduction under this chapter to the qualified corporation for such taxable year with respect to-- 7i7 employer contributions under a stock bonus1 pension1 profit-sharing1 or annuity plan1 7ii7 employer-provided coverage under any accident or health plan for employees1 and 7iii7 the cost of life or disability insurance provided to employees4 ,any amount treated as wages under paragraph 7#b77;,d7 shall not be taken into account under this subparagraph4 7#d7 ,depreciation rules ,for purposes of this section-- 7,a7 ,depreciation allowances ,the term depreciation allowances means the depreciation deductions allowable 7or1 in the case of a foreign corporation1 which would be allowable if such foreign corporation were a domestic corporation7 under section #afg to the qualified corporation4 7,b7 ,qualified tangible property ,the term qualified tangible property means any tangible property-- 7i7 which is used by the qualified corporation in a possession of the ,united ,states in the active conduct of a trade or business within such possession1 7ii7 to which section #afh applies1 and 7iii7 which is not #c-year property for purposes of such section4 7d7 ,intangible low-,taxed income tax amount ,for purposes of this section-- 7#a7 ,in general ,the intangible low-taxed income tax amount is an amount equal to the lesser of-- 7,a7 the eligible possession intangible low-tax income tax amount1 or 7,b7 the global intangible low-taxed income tax amount4 7#b7 ,eligible possession intangible low-taxed income tax amount 7,a7 ,in general ,the eligible possession intangible low-taxed income tax amount is an amount equal to the excess of-- 7i7 the product of-- 7,i7 the rate in effect under section #aa for the taxable year1 and 7,,ii7 the sum of the possession intangible low-taxed income amount for such taxable year and the amount which would be treated as a dividend under section #gh if only amounts attributable to such possession intangible low-tax income amount were taken into account under such section for such taxable year1 reduced by the possession ,,ilti deduction for such taxable year1 over 7ii7 an amount equal to the amount described in section #ifj7;d71 determined-- 7,i7 by substituting possession intangible low-taxed income amount 7as defined in section #cj;,e7d77#b77;,b77 for global intangible low-taxed income 7as defined in section #iea;,a7b77 in paragraph 7#b77;,a7 thereof1 and 7,,ii7 by only taking into account income from the active conduct of a trade or business and from sources 7determined under rules similar to the rules of part ,i of chapter ,n7 within possessions of the ,united ,states for purposes of determining the amounts under paragraphs 7#b77;,b7 and 7#c7 thereof4 7,b7 ,possession intangible low-taxed income amount ,the possession intangible low-taxed income amount is equal to the amount of global intangible low-taxed income 7as defined in section #iea;,a7b77 for the taxable year1 determined-- 7i7 by only taking into account income from the active conduct of a trade or business and from sources 7determined under rules similar to the rules of part ,i of chapter ,n7 within possessions of the ,united ,states for purposes of determining the tested income and tested loss1 and 7ii7 for purposes of determining the qualified business asset investment1 by only taking into account specified tangible property which is predominantly used-- 7,i7 in the production of income described in clause 7i71 and 7,,ii7 in possessions of the ,united ,states4 7,c7 ,possession ,,ilti deduction ,the possession ,,ilti deduction is #ej percent 7#cg4e percent in the case of taxable years beginning after ,december #ca1 #bjbe7 of-- 7i7 the possession intangible low-taxed income amount 7if any7 for such taxable year1 and 7ii7 the amount which would be treated as a dividend under section #gh if only amounts attributable to the amount described in clause 7i7 were taken into account4 ,rules similar to the rules of section #bej7;a77#b7 7applied by substituting possession intangible low-taxed income amount 7as defined in section #cj;,e7d77#b77;,b77 for global intangible low-taxed income amount in subsection 7a77#a77;,b77i7 for purposes of determining the amount described and taken into account therein7 shall apply for purposes of this subparagraph4 7#c7 ,global intangible low-taxed income tax amount ,for purposes of this subsection1 the global intangible low-taxed income tax amount is an amount equal to the excess of-- 7,a7 the product of-- 7i7 the rate in effect under section #aa for the taxable year1 and 7ii7 the sum of global intangible low-taxed income amount determined under section #iea;,a7b7 for such taxable year and the amount which would be treated as a dividend under section #gh if only amounts attributable to such global intangible low-taxed income amount were taken into account under such section for such taxable year1 reduced by an amount equal to the amount determined under section #bej7;a77#a77;,b71 over 7,b7 an amount equal to the amount described in section #ifj7;d7 7determined after the application of section #ijd74 7e7 ,possession ,the term possession of the ,united ,states includes the ,commonwealth of ,puerto ,rico and the ,virgin ,islands4 7f7 ,credit not allowed against certain taxes ,the credit provided by subsection 7a7 shall not be allowed against the tax imposed by-- 7#a7 section #eca 7relating to the tax on accumulated earnings71 7#b7 section #eda 7relating to personal holding company tax71 or 7#c7 section #acea 7relating to recoveries of foreign expropriation losses74 7g7 ,other rules 7#a7 ,denial of ,double ,benefit 7,a7 ,branches ,in the case of a qualified domestic corporation described in subsection 7b77#a77;,a7-- 7i7 no credit or deduction shall be allowed under this chapter for-- 7,i7 the portion of the wages or salaries paid or incurred for the taxable year which is equal to the amount of wages taken into account in determining the wage and asset limitation under subsection 7c77#a77;,a71 7,,ii7 the portion of employee fringe benefit expenses for the taxable year which is equal to the amount of such expenses taken into account in determining the wage and asset limitation under subsection 7c77#a77;,a71 and 7,,iii7 the portion of depreciation allowances for the taxable year which is equal to the amount of such allowances taken into account under subsection 7c77#a77;,b71 and 7ii7 any tax of a foreign country or a possession of the ,united ,states which is paid or accrued with respect to taxable income which is taken into account in computing the credit under subsection 7a77#b77;,a7 shall not be treated as income1 war profits1 or excess profits taxes paid or accrued to a foreign country or possession of the ,united ,states1 and no deduction shall be allowed under this title with respect to any amounts so paid or accrued4 7,b7 ,controlled foreign corporations ,in the case of a qualified domestic corporation described in subsection 7b77#a77;,b71 for purposes of determining tested income or tested loss under section #iea;,a-- 7i7 the deductions described in section #iea;,a7c77#b77;,a77ii7 attributable to wages shall be reduced by the amounts described in subparagraph 7,a77i77,i71 7ii7 the deductions described in section #iea;,a7c77#b77;,a77ii7 attributable to employee fringe benefit expenses shall be reduced by the amounts described in subparagraph 7,a77i77,,ii71 and 7iii7 the deductions described in section #iea;,a7c77#b77;,a77ii7 attributable to depreciation allowances shall be reduced by the amounts described in subparagraph 7,a77i77,,iii74 7#b7 ,carryover of certain unused limitation 7,a7 ,branches 7i7 ,in general ,in the case of a qualified domestic corporation described in subsection 7b77#a77;,a71 if the wage and asset limitation with respect to such corporation exceeds the amount described in subsection 7a77#b77;,a77i71 then such excess shall be a carryover to the first preceding taxable year and to any of the first #aj succeeding taxable years1 in that order1 and1 subject to the limitations of clause 7ii71 shall be added to the wage and asset limitation for the taxable year to which it is carried4 7ii7 ,limitation ,the unused amount which may be taken into account under clause 7i7 for any taxable year shall not exceed the amount 7if any7 by which the amount described in subsection 7a77#b77;,a77i7 for such taxable year exceeds the sum of-- 7,i7 the wage and asset limitation with respect to such corporation for such taxable year determined without regard to this paragraph1 and 7,,ii7 the amounts which1 by reason of this paragraph1 are carried to such taxable year and are attributable to taxable years before the unused amount4 7,b7 ,controlled foreign corporations 7i7 ,in general ,in the case of a qualified domestic corporation described in subsection 7b77#a77;,b71 if the amount described in subsection 7a77#b77;,b77ii7 for any taxable year exceeds the intangible low-taxed income tax amount1 then such excess shall be a carryover to the first preceding taxable year and to any of the first #aj succeeding taxable years1 in that order1 and1 subject to the limitations of clause 7ii71 shall be added to the amount described in subsection 7a77#b77;,b77ii7 for the taxable year to which it is carried4 7ii7 ,limitation ,the unused amount which may be taken into account under clause 7i7 for any taxable year shall not exceed the amount 7if any7 by which the intangible low-taxed income tax amount for such taxable year exceeds the sum of-- 7,i7 the amount described in subsection 7a77#b77;,b77ii7 for such taxable year determined without regard to this paragraph1 and 7,,ii7 the amounts which1 by reason of this paragraph1 are carried to such taxable year and are attributable to taxable years before the unused amount4 7#c7 ,separate application to each possession ,for purposes of determining the amount of the credit allowed under this section1 this section shall be applied separately with respect to each possession4 4 7b7 ,conforming amendments 7#a7 ,section #ijd7;b7 of the ,internal ,revenue ,code of #aihf is amended by redesignating paragraph 7#d7 as paragraph 7#e7 and by inserting after paragraph 7#c7 the following new paragraph3 7#d7 ,coordination with section #cj;,e ,for purposes of subsection 7a71 in the case of a qualified domestic corporation described in section #cj;,e7b77#a77;,a71 the taxable income shall not include any portion thereof taken into account for purposes of the credit 7if any7 allowed by section #cj;,e 7without regard to subsection 7c7 thereof74 4 7#b7 ,section #ijd7;f77#a7 of such ,code is amended by inserting and section #cj;,e after ,for purposes of this subpart4 7#c7 ,section #ijd7;g77#a7 of such ,code is amended by striking section #icf and inserting section #cj;,e4 7#d7 ,the table of sections for subpart ,b of part ,,iv of subchapter ,a of chapter #a of such ,code is amended by adding at the end the following3 ,sec4 #cj;,e4 ,possession economic activity credit4 4 7c7 ,treatment of credit under ,,beat ,section #ei;,a7b77#a77;,b77ii7 of the ,internal ,revenue ,code of #aihf is amended by redesignating subclause 7,,ii7 as subclause 7,,iii7 and by inserting after subclause 7,i7 the following new subclause3 7,,ii7 the credit allowed under section #cj;,e1 plus 4 7d7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4