PlainBillCongress, translated.Legislation. Context. Public interest.Referred to the House Committee on Ways and Means.
Congressional Research Service
No official summary is available in the imported record yet.
People & committees
Rep. Conaway, Herbert [D-NJ-3] · D–NJ
Legislative record
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Referred to the House Committee on Ways and Means.
Introduced in House
Introduced in House
Primary sources
Text links open the official source. We also preserved the text version used in the PlainBill explanation below.
No related bills are listed in this snapshot. This does not establish whether the proposal has appeared in earlier Congresses.
Source last updated: May 8, 2025. Consult Congress.gov for the current record.
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PlainBill explanation
Based on the full Introduced in House · 2025-03-06 text. This explanation has not received human editorial review. This overview describes the proposal’s major provisions; it does not establish what its real-world effects would be.
This proposal would exclude qualifying payments to foreign related parties from a tax-code category called “base erosion payments.” Both the foreign recipient and the payment would need to face an effective foreign income tax rate of at least 15 percent. Taxpayers seeking this treatment would have to establish those conditions to the Secretary’s satisfaction.
Certain payments to foreign related parties subject to sufficient foreign tax not treated as base erosion payments
An amount shall not be treated as a base erosion payment if the taxpayer establishes to the satisfaction of the Secretary that— (A) the foreign person to whom such amount is paid or incurred is subject to an effective rate of foreign income tax of at least 15 percent, and (B) such amount is subject to an effective rate of foreign income tax of at least 15 percent.
Unless the Secretary provides otherwise, taxpayers could use qualifying financial statements to establish the effective foreign income tax rate, with adjustments determined by the Secretary. The bill refers to an existing statutory definition of qualifying statements.
Except as otherwise provided by the Secretary, the effective rate of foreign income tax may be established on the basis of applicable financial statements (as defined in section 451(b)(3)) with appropriate adjustments (as determined by the Secretary)
The financial-statement calculation would account for specified adjustments involving dividends, taxes, investment and asset gains or losses, transfers within a corporate group, foreign currency, bribes and illegal payments, large penalties, accounting corrections and changes, and pension expenses. The Secretary could specify additional items.
with appropriate adjustments (as determined by the Secretary) for excluded dividends, net tax expense, excluded equity gain or loss, included revaluation method gain or loss, gain or loss from intragroup transfers of assets and liabilities, asymmetric foreign currency gains or losses, bribes, illegal payments, large penalties, prior period errors and changes in accounting methods, accrued pension expenses, and such other items as the Secretary may provide.
For this exception, foreign income taxes would include income, war-profits, and excess-profits taxes paid or accrued to foreign countries or U.S. possessions. Accrued taxes are amounts recognized as owed even if not yet paid.
For purposes of this subsection, the term “foreign income taxes” means any income, war profits, or excess profits taxes paid or accrued to any foreign country or to any possession of the United States.
The proposal would add regulatory provisions covering how to determine effective foreign income tax rates and prevent tax avoidance or abuse. These would include rules allowing transactions between related parties to be treated differently for tax purposes from how the parties characterized them.
(b) Regulations Section 59A(j) of such Code, as redesignated by subsection (a), is amended
(3) for the application of subsection (i), including— (A) procedures for determining the effective rate of foreign income tax, and (B) rules to the prevent tax avoidance or abuse, including rules for recharacterizing a transaction or series of transactions among related parties.
If enacted, the amendments would apply to tax years beginning after the enactment date.
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
The supplied actions snapshot, updated May 8, 2025, records introduction in the House and referral to the House Committee on Ways and Means on March 6, 2025.
Source snapshot updated 2025-05-08T14:05:51Z. 2025-03-06: Referred to the House Committee on Ways and Means. 2025-03-06: Introduced in House
A closer look
Reviewed version: Introduced in House · 2025-03-06. These findings describe provisions and who may benefit; they are not judgments of waste, corruption, or motive.
This review covers the supplied bill text. “None identified” does not rule out provisions in later versions or accompanying reports and disclosures.
Provisions outside the bill’s main subject, or policy changes attached to appropriations.
None identified in the reviewed text
No unrelated provision or policy change attached to appropriations was identified in the complete supplied introduced text. This conclusion is limited to that version and does not establish absence in other versions or accompanying materials.
Spending directed to particular recipients or places outside ordinary competitive or formula-based allocation.
None identified in the reviewed text
No congressionally directed spending for particular recipients or places was identified in the complete supplied introduced text. This conclusion is limited to that version and does not establish absence in other versions or accompanying materials.
Narrow exceptions, exemptions, or preferential treatment that warrant a closer look.
Findings to examine
The supplied text contains a conditional exception from existing tax treatment. This exception is central to the proposal; its classification does not establish its fiscal value or merits.
The proposal would give taxpayers a specific tax-treatment exception for payments to foreign related parties when both the recipient and the payment meet the 15 percent effective foreign income tax threshold. Qualifying amounts would be excluded from base erosion payment treatment, subject to proof satisfactory to the Secretary.
Certain payments to foreign related parties subject to sufficient foreign tax not treated as base erosion payments
An amount shall not be treated as a base erosion payment if the taxpayer establishes to the satisfaction of the Secretary that— (A) the foreign person to whom such amount is paid or incurred is subject to an effective rate of foreign income tax of at least 15 percent, and (B) such amount is subject to an effective rate of foreign income tax of at least 15 percent.
Full text preserved for this analysis. Legislative record snapshot: May 8, 2025. How PlainBill uses AI