,,ii #aagth ,,congress #b;d ,session ,s4 #ecdi ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,december #ba1 #bjbb ,mr4 ,portman introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to modify certain provisions relating to the taxation of international entities4 #a4 ,short title1 etc 7a7 ,short title ,this ,act may be cited as the ,international ,competition for ,american ,jobs ,act4 7b7 ,amendment of #aihf code ,except as otherwise expressly provided1 whenever in this ,act an amendment or repeal is expressed in terms of an amendment to1 or repeal of1 a section or other provision1 the reference shall be considered to be made to a section or other provision of the ,internal ,revenue ,code of #aihf4 #b4 ,permanent extension of look-thru rule for controlled foreign corporations 7a7 ,in general ,section #ied7;c77#f77;,c7 is amended by striking and before ,january #a1 #bjbf14 7b7 ,effective date ,the amendment made by this section shall apply to taxable years of foreign corporations beginning after ,december #ca1 #bjbb1 and to taxable years of ,united ,states shareholders with or within which such taxable years of foreign corporations end4 #c4 ,modification of deduction for foreign-derived intangible income and global intangible low-taxed income 7a7 ,in general ,section #bej7;a7 is amended to read as follows3 7a7 ,allowance of deduction ,in the case of a domestic corporation for any taxable year1 there shall be allowed as a deduction an amount equal to the sum of-- 7#a7 #cg4e percent of the foreign-derived intangible income of such domestic corporation for such taxable year1 plus 7#b7 #ej percent of-- 7,a7 the global intangible low-taxed income amount 7if any7 which is included in the gross income of such domestic corporation under section #iea;,a for such taxable year1 and 7,b7 the amount treated as a dividend received by such corporation under section #gh which is attributable to the amount described in subparagraph 7,a74 4 7b7 ,deduction taken into account in determining net operating loss deduction ,section #agb7;d7 is amended by striking paragraph 7#i74 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjbb4 #d4 ,modifications to base erosion minimum tax 7a7 ,base erosion minimum tax amount determined without regard to credits 7#a7 ,in general ,section #ei;,a7b77#a77;,b7 is amended to read as follows3 7,b7 an amount equal to the regular tax liability 7as defined in section #bf7;b77 of the taxpayer for the taxable year4 4 7#b7 ,conforming amendment ,section #ei;,a7b7 is amended by striking paragraph 7#d74 7b7 ,elimination of modifications for taxable years after #bjbe 7#a7 ,in general ,section #ei;,a7b7 is amended by striking paragraph 7#b7 and redesignating paragraph 7#c7 as paragraph 7#b74 7#b7 ,conforming amendments 7,a7 ,section #ei;,a7b77#a7 is amended by striking paragraphs 7#b7 and 7#c7 and inserting paragraph 7#b74 7,b7 ,paragraph 7#b7 of section #ei;,a7b71 as redesignated by paragraph 7#a71 is amended by striking under paragraphs 7#a77;,a7 and 7#b77;,a7 shall each be increased and inserting under paragraph 7#a77;,a7 shall be increased4 7,c7 ,section #ei;,a7e77#a77;,c7 is amended by striking subsection 7b77#c77;,b7 and inserting subsection 7b77#b77;,b74 7c7 ,expansion and consolidation of rules ,to exempt certain payments from treatment as base erosion payments 7#a7 ,in general ,section #ei;,a is amended by redesignating subsection 7i7 as subsection 7j7 and by inserting after subsection 7h7 the following new subsection3 7i7 ,certain payment not treated as base erosion payments 7#a7 ,exception for payments on which tax is imposed 7,a7 ,in general ,an amount shall not be treated as a base erosion payment if tax is 7or was at the time of payment or accrual7 imposed by this chapter with respect to such amount 7other than by this section74 7,b7 ,treatment of certain deductions ,for purposes of subparagraph 7,a71 tax shall be treated as imposed by this chapter without regard to any deduction allowed under part ,,viii of subchapter ,b4 7,c7 ,application of certain rules ,the amount not treated as a base erosion payment by reason of this paragraph shall be determined under rules similar to the rules of section #afc7;j77#e7 7as in effect before the date of the enactment of ,public ,law #aae-ig74 7#b7 ,exception for certain payments subject to sufficient foreign tax 7,a7 ,in general ,an amount shall not be treated as a base erosion payment if the taxpayer establishes to the satisfaction of the ,secretary that such amount was made to a foreign person which is a related party of the taxpayer that is subject to an effective rate of foreign income tax 7as defined in section #ijd7;d77#b77;,f77 which is not less than #ah4i percent4 7,b7 ,certain payments to related parties ,to the extent provided by the ,secretary in regulations1 an amount paid to a foreign person which is a related party of the taxpayer shall be treated as paid to another foreign person which is a related party of the taxpayer if such second foreign person is subject to an effective rate of foreign income tax 7as defined in section #ijd7;d77#b77;,f77 which is less than #ah4i percent1 to the extent the amount so paid directly or indirectly funds a payment to such second foreign person4 7,c7 ,determination on basis of applicable financial statements ,except as otherwise provided by the ,secretary under subparagraph 7,d71 the effective rate of foreign income tax with respect to any amount may be established on the basis of applicable financial statements 7as defined in section #dea7;b77#c774 7,d7 ,regulations ,the ,secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this paragraph1 including regulations or other guidance providing procedures for determining the effective rate of foreign income tax to which any amount is subject4 ,such procedures may require that any transaction or series of transactions among multiple parties be recharacterized as one or more transactions directly among any #b or more of such parties where the ,secretary determines that such recharacterization is appropriate to carry out1 or prevent avoidance of1 the purposes of this section4 7#c7 ,exception for certain amounts with respect to services ,subsections 7d77#a7 and 7d77#b7 shall not apply to so much of any amount paid or accrued by a taxpayer for services as does not exceed the total services cost of such services4 ,the preceding sentence shall not apply unless such services meet the requirements for eligibility for use of the services cost method under section #dhb 7determined without regard to the requirement that the services not contribute significantly to fundamental risks of business success or failure74 4 7#b7 ,conforming amendment ,section #ei;,a7d7 is amended by striking paragraph 7#e74 7d7 ,other modifications 7#a7 ,section #ei;,a7b77#c77;,b77ii7 is amended by striking registered securities dealer and inserting securities dealer registered4 7#b7 ,section #ei;,a7h77#b77;,b7 is amended by striking section #fjch;,b7b77#b7 and inserting section #fjch;,a7b77#b74 7#c7 ,section #ei;,a7j77#b71 as redesignated by subsection 7b71 is amended by striking subsection 7g77#c7 and inserting subsection 7h77#c74 7e7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjbb4 #e4 ,rules for allocation of certain deductions to foreign source global intangible low-taxed income for purposes of foreign tax credit limitation 7a7 ,in general ,section #ijd7;b7 is amended by adding at the end the following new paragraph3 7#e7 ,deductions treated as allocable to foreign source global intangible low-taxed income ,in the case of a domestic corporation and solely for purposes of the application of subsection 7a7 with respect to amounts described in subsection 7d77#a77;,a71 the taxpayer's taxable income from sources without the ,united ,states shall be determined-- 7,a7 by allocating and apportioning any deduction allowed under section #bej7;a77#b7 7and any deduction allowed under section #afd7;a77#c7 for taxes imposed on amounts described in section #bej7;a77#b77 to such income1 and 7,b7 by allocating and apportioning any other deduction to such income only if the ,secretary determines that such deduction is directly allocable to such income4 ,any deduction which would 7but for subparagraph 7,b77 have been allocated or apportioned to such income shall only be allocated or apportioned to income which is from sources within the ,united ,states4 4 7b7 ,application of separate limitation losses with respect to global intangible low-,taxed income 7#a7 ,in general ,section #ijd7;f77#e77;,b7 is amended to read as follows3 7,b7 ,allocation of losses ,except as otherwise provided in this subparagraph1 the separate limitation losses for any taxable year 7to the extent such losses do not exceed the separate limitation incomes for such year7 shall be allocated among 7and operate to reduce7 such incomes on a proportionate basis4 ,in the case of a separate limitation loss for any taxable year in any category other than subparagraph 7d77#a77;,a71 the amount of such separate limitation loss shall be allocated among 7and operate to reduce7 separate limitation income in any category other than income described in subparagraph 7d77#a77;,a7 on a proportionate basis 7without regard to income described in subparagraph 7d77#a77;,a774 ,the remaining separate limitation losses may reduce separate limitation income described in subparagraph 7d77#a77;,a7 only to the extent that the aggregate amount of such losses exceeds the aggregate amount of separate limitation incomes 7other than income described in subparagraph 7d77#a77;,a77 for such taxable year4 4 7#b7 ,income category ,section #ijd7;f77#e77;,e77i7 is amended to read as follows3 7i7 ,income category ,the term income category means each category of income with respect to which this section is required to be applied separately by reason of any provision of this title4 4 7#c7 ,separate limitation loss ,section #ijd7;f77#e77;,e77iii7 is amended to read as follows3 7iii7 ,separate limitation loss ,the term separate limitation loss means1 with respect to any income category1 the amount by which the gross income from sources outside the ,united ,states is exceeded by the sum of the deductions properly allocated and apportioned thereto4 4 7c7 ,application of carryforward to taxes on global intangible low-,taxed income ,section #ijd7;c7 is amended by striking the last sentence4 7d7 ,effective date 7#a7 ,in general ,except as provided in paragraph 7#b71 the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjbb4 7#b7 ,modification of foreign tax credit carryback and carryforward ,the amendment made by subsection 7c7 shall apply to taxes paid or accrued in taxable years beginning after ,december #ca1 #bjbb4 #f4 ,restoration of limitation on downward attribution of stock ownership in applying constructive ownership rules 7a7 ,in general ,section #ieh7;b7 is amended-- 7#a7 by inserting after paragraph 7#c7 the following3 7#d7 ,subparagraphs 7,a71 7,b71 and 7,c7 of section #cah7;a77#c7 shall not be applied so as to consider a ,united ,states person as owning stock which is owned by a person who is not a ,united ,states person4 1 and 7#b7 by striking ,paragraph 7#a7 in the last sentence and inserting ,paragraphs 7#a7 and 7#d74 7b7 ,foreign controlled ,united ,states shareholders ,subpart ,f of part ,,iii of subchapter ,n of chapter #a is amended by inserting after section #iea;,a the following new section3 #iea;,b4 ,amounts included in gross income of foreign controlled ,united ,states shareholders 7a7 ,in general ,in the case of any foreign controlled ,united ,states shareholder of a foreign controlled foreign corporation-- 7#a7 this subpart 7other than sections #iea;,a1 #iea7;b71 and #ieg7 shall be applied with respect to such shareholder 7separately from1 and in addition to1 the application of this subpart without regard to this section7-- 7,a7 by substituting foreign controlled ,united ,states shareholder for ,united ,states shareholder each place it appears therein1 and 7,b7 by substituting foreign controlled foreign corporation for controlled foreign corporation each place it appears therein1 and 7#b7 section #iea;,a shall be applied with respect to such shareholder-- 7,a7 by treating each reference to ,united ,states shareholder in such section as including a reference to such shareholder1 and 7,b7 by treating each reference to controlled foreign corporation in such section as including a reference to such foreign controlled foreign corporation4 7b7 ,foreign controlled ,united ,states shareholder ,for purposes of this section1 the term foreign controlled ,united ,states shareholder means1 with respect to any foreign corporation1 any ,united ,states person which would be a ,united ,states shareholder with respect to such foreign corporation if-- 7#a7 section #iea7;b7 were applied by substituting more than #ej percent for #aj percent or more1 and 7#b7 section #ieh7;b7 were applied without regard to paragraph 7#d7 thereof4 7c7 ,foreign controlled foreign corporation ,for purposes of this section1 the term foreign controlled foreign corporation means a foreign corporation1 other than a controlled foreign corporation1 which would be a controlled foreign corporation if section #ieg7;a7 were applied-- 7#a7 by substituting foreign controlled ,united ,states shareholders for ,united ,states shareholders1 and 7#b7 by substituting section #ieh7;b7 7other than paragraph 7#d7 thereof7 for section #ieh7;b74 7d7 ,regulations ,the ,secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section1 including regulations or other guidance-- 7#a7 to treat a foreign controlled ,united ,states shareholder or a foreign controlled foreign corporation as a ,united ,states shareholder or as a controlled foreign corporation1 respectively1 for purposes of provisions of this title other than this subpart1 and 7#b7 to prevent the avoidance of the purposes of this section4 4 7c7 ,clerical amendment ,the table of sections for subpart ,f of part ,,iii of subchapter ,n of chapter #a is amended by inserting after the item relating to section #iea;,a the following new item3 ,sec4 #iea;,b4 ,amounts included in gross income of foreign controlled ,united ,states shareholders4 4 7d7 ,effective date ,the amendments made by this section shall apply to-- 7#a7 the last taxable year of foreign corporations beginning before ,january #a1 #bjbc1 and each subsequent taxable year of such foreign corporations1 and 7#b7 taxable years of ,united ,states persons in which or with which such taxable years of foreign corporations end4 7e7 ,no inference ,the amendments made by this section shall not be construed to create any inference with respect to the proper application of any provision of the ,internal ,revenue ,code of #aihf with respect to taxable years beginning before the taxable years to which such amendments apply4 #g4 ,carryover of net ,,cfc tested loss 7a7 ,in general ,section #iea;,a7c7 is amended by adding at the end the following new paragraph3 7#c7 ,carryover of net ,,cfc tested loss 7,a7 ,in general ,if the amount described in paragraph 7#a77;,b7 with respect to any ,united ,states shareholder for any taxable year of such ,united ,states shareholder 7determined after the application of this paragraph with respect to amounts arising in preceding taxable years7 exceeds the amount described in paragraph 7#a77;,a7 with respect to such shareholder of such taxable year1 the amount otherwise described in paragraph 7#a77;,b7 with respect to such shareholder for the succeeding taxable year shall be increased by the amount of such excess4 7,b7 ,proper adjustment in allocations of global intangible low-taxed income to controlled foreign corporations ,proper adjustments shall be made in the application of subsection 7f77#b77;,b7 to take into account any decrease in global intangible low-taxed income by reason of the application of subparagraph 7,a74 4 7b7 ,application of rules with respect to ownership changes ,section #chb7;d7 is amended by adding at the end the following new paragraph3 7#d7 ,application to carryover of net ,,cfc tested loss ,the term pre-change loss shall include any excess carried over under section #iea;,a7c77#c7 under rules similar to the rules of paragraph 7#a74 4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years of foreign corporations beginning after ,december #ca1 #bjbb1 and to taxable years of ,united ,states shareholders in which or with which such taxable years of foreign corporations end4 #h4 ,redetermination of foreign taxes and related claims 7a7 ,in general ,section #ije7;c7 is amended-- 7#a7 in paragraph 7#a71 by striking or at the end of subparagraph 7,b7 and by inserting after subparagraph 7,c7 the following new subparagraphs3 7,d7 the taxpayer makes a timely change in its choice to claim a credit or deduction for taxes paid or accrued1 or 7,e7 there is any other change in the amount1 or treatment1 of taxes1 which affects the taxpayer's tax liability under this chapter1 1 7#b7 in paragraph 7#b77;,b77i71 by inserting 1 except as otherwise provided by the ,secretary1 after shall1 and 7#c7 by striking accrued in the heading thereof4 7b7 ,modification to time for claiming credit or deduction ,section #ija7;a7 is amended by striking the second sentence and inserting the following3 ,such choice for any taxable year may be made or changed at any time before the expiration of the applicable period prescribed by section #feaa for making a claim for credit or refund of an overpayment of the tax imposed by this chapter for such taxable year that is attributable to such amounts44 7c7 ,modification to special period of limitation ,section #feaa7;d77#c7 is amended-- 7#a7 in subparagraph 7,a7-- 7,a7 by inserting a change in the liability for before any taxes paid or accrued1 7,b7 by striking actually paid and inserting paid 7or deemed paid under section #ifj71 and 7,c7 by inserting change in the liability for before foreign taxes in the heading thereof1 and 7#b7 in subparagraph 7,b71 by striking the allowance of a credit for the taxes and inserting the allowance of an additional credit by reason of the change in liability for the taxes4 7d7 ,effective date 7#a7 ,in general ,except as otherwise provided in this subsection1 the amendments made by this section shall apply to taxes paid or accrued in taxable years beginning after ,december #ca1 #bjbb4 7#b7 ,certain changes ,the amendments made by paragraphs 7#a7 and 7#c7 of subsection 7a7 shall apply to changes that occur on or after the date which is #fj days after the date of the enactment of this ,act4 7#c7 ,modification to special period of limitation ,the amendments made by subsection 7c7 shall apply to taxes paid1 accrued1 or deemed paid in taxable years beginning after ,december #ca1 #bjbb4