I 117TH CONGRESS 1ST SESSION H. R. 1786 To end offshore corporate tax avoidance, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MARCH 11, 2021 Mr. DOGGETT (for himself, Mr. BLUMENAUER, Mr. COHEN, Mr. DANNY K. DAVIS of Illinois, Mr. DEFAZIO, Ms. DELAURO, Mr. GARAMENDI, Mr. GRIJALVA, Ms. JAYAPAL, Ms. JOHNSON of Texas, Mr. JOHNSON of Geor- gia, Mr. MFUME, Mr. NADLER, Mr. RASKIN, Mr. SARBANES, Ms. SCHA- KOWSKY, Mr. TONKO, Ms. WATERS, Mrs. WATSON COLEMAN, and Mr. CARTWRIGHT) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Fi- nancial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To end offshore corporate tax avoidance, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE, ETC. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Stop Tax Haven Abuse Act’’. 5 (b) AMENDMENT OF 1986 CODE.—Except as other- 6 wise expressly provided, whenever in this Act an amend- 7 VerDate Sep 11 2014 19:48 May 03, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1786.IH H1786 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 1786 IH ment or repeal is expressed in terms of an amendment 1 to, or repeal of, a section or other provision, the reference 2 shall be considered to be made to a section or other provi- 3 sion of the Internal Revenue Code of 1986. 4 (c) TABLE OF CONTENTS.—The table of contents of 5 this Act is as follows: 6 Sec. 1. Short title, etc. TITLE I—ENDING CORPORATE OFFSHORE TAX AVOIDANCE Sec. 101. Repeal of check-the-box rules for certain foreign entities and CFC look-thru rules. Sec. 102. Swap payments made from the United States to persons offshore. Sec. 103. Requirement to disclose total corporate taxes paid. Sec. 104. Penalty for election to pay tax on deferred foreign income in install- ments. Sec. 105. Modifications to base erosion and anti-abuse tax. Sec. 106. Treatment of foreign base company oil related income as subpart F income. Sec. 107. Modifications of foreign tax credit rules applicable to dual capacity taxpayers. Sec. 108. Treatment of intangibles transferred to partnerships. TITLE II—ADDITIONAL MEASURES TO COMBAT TAX EVASION Sec. 201. Authorizing special measures against foreign jurisdictions, financial institutions, and others that significantly impede United States tax enforcement. Sec. 202. Strengthening the Foreign Account Tax Compliance Act (FATCA). Sec. 203. Reporting United States beneficial owners of foreign owned financial accounts. Sec. 204. Penalty for failing to disclose offshore holdings. Sec. 205. Deadline for anti-money laundering rule for investment advisers. Sec. 206. Anti-money laundering requirements for formation agents. Sec. 207. Strengthening John Doe summons proceedings. Sec. 208. Improving enforcement of foreign financial account reporting. VerDate Sep 11 2014 19:48 May 03, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6211 E:\BILLS\H1786.IH H1786 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 1786 IH TITLE I—ENDING CORPORATE 1 OFFSHORE TAX AVOIDANCE 2 SEC. 101. REPEAL OF CHECK-THE-BOX RULES FOR CERTAIN 3 FOREIGN ENTITIES AND CFC LOOK-THRU 4 RULES. 5 (a) CHECK-THE-BOX RULES.—Paragraph (3) of sec- 6 tion 7701(a) is amended— 7 (1) by striking ‘‘and’’, and 8 (2) by inserting after ‘‘insurance companies’’ 9 the following: ‘‘, and any foreign business entity 10 that— 11 ‘‘(A) has a single owner that does not have 12 limited liability, or 13 ‘‘(B) has one or more members all of 14 which have limited liability’’. 15 (b) LOOK-THRU RULE.—Subparagraph (C) of sec- 16 tion 954(c)(6) is amended to read as follows: 17 ‘‘(C) TERMINATION.—Subparagraph (A) 18 shall not apply to dividends, interest, rents, and 19 royalties received or accrued after the date of 20 the enactment of the Stop Tax Haven Abuse 21 Act.’’. 22 (c) EFFECTIVE DATE.— 23 VerDate Sep 11 2014 19:48 May 03, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1786.IH H1786 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 1786 IH (1) The amendments made by subsection (a) 1 shall take effect on the date of the enactment of this 2 Act. 3 (2) The amendment made by subsection (b) 4 shall apply to payments received after the date of 5 the enactment of this Act. 6 SEC. 102. SWAP PAYMENTS MADE FROM THE UNITED 7 STATES TO PERSONS OFFSHORE. 8 (a) TAX ON SWAP PAYMENTS RECEIVED BY FOR- 9 EIGN PERSONS.—Section 871(a)(1) is amended— 10 (1) by inserting ‘‘swap payments (as identified 11 in section 1256(b)(2)(B)),’’ after ‘‘annuities,’’ in 12 subparagraph (A), and 13 (2) by adding at the end the following new sen- 14 tence: ‘‘In the case of swap payments, the source of 15 a swap payment is determined by reference to the lo- 16 cation of the payor.’’. 17 (b) TAX ON SWAP PAYMENTS RECEIVED BY FOR- 18 EIGN CORPORATIONS.—Section 881(a) is amended— 19 (1) by inserting ‘‘swap payments (as identified 20 in section 1256(b)(2)(B)),’’ after ‘‘annuities,’’ in 21 paragraph (1), and 22 (2) by adding at the end the following new sen- 23 tence: ‘‘In the case of swap payments, the source of 24 VerDate Sep 11 2014 19:48 May 03, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1786.IH H1786 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 1786 IH a swap payment is determined by reference to the lo- 1 cation of the payor.’’. 2 SEC. 103. REQUIREMENT TO DISCLOSE TOTAL CORPORATE 3 TAXES PAID. 4 (a) IN GENERAL.—Section 13 of the Securities Ex- 5 change Act of 1934 (15 U.S.C. 78m) is amended by add- 6 ing at the end the following new subsection: 7 ‘‘(s) DISCLOSURE OF TOTAL CORPORATE TAXES 8 PAID.— 9 ‘‘(1) ISSUER DISCLOSURE REQUIREMENT.— 10 Each issuer required to file an annual or quarterly 11 report under subsection (a) shall disclose in that re- 12 port— 13 ‘‘(A) the total pre-tax profit of the issuer 14 during the period covered by the report; 15 ‘‘(B) the total amount paid by the issuer 16 in State taxes during the period covered by the 17 report; 18 ‘‘(C) the total amount paid by the issuer in 19 Federal taxes during the period covered by the 20 report; and 21 ‘‘(D) the total amount paid by the issuer 22 in foreign taxes during the period covered by 23 the report. 24 VerDate Sep 11 2014 19:48 May 03, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1786.IH H1786 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 1786 IH ‘‘(2) DISCLOSURE OF COUNTRY-BY-COUNTRY 1 REPORTING INFORMATION.—Each issuer required to 2 file an annual or quarterly report under subsection 3 (a) shall disclose in that report, for each of its sub- 4 sidiaries and aggregated on a country-by-country 5 basis— 6 ‘‘(A) revenues generated from transactions 7 with other constituent entities; 8 ‘‘(B) revenues not generated from trans- 9 actions with other constituent entities; 10 ‘‘(C) profit or loss before income tax; 11 ‘‘(D) total income tax paid on a cash basis 12 to all tax jurisdictions, and any taxes withheld 13 on payments received by the constituent enti- 14 ties; 15 ‘‘(E) total accrued tax expense recorded on 16 taxable profits or losses, reflecting only oper- 17 ations in the relevant annual period and exclud- 18 ing deferred taxes or provisions for uncertain 19 tax liabilities; 20 ‘‘(F) stated capital, except that the stated 21 capital of a permanent establishment must be 22 reported in the tax jurisdiction of residence of 23 the legal entity of which it is a permanent es- 24 tablishment unless there is a defined capital re- 25 VerDate Sep 11 2014 19:48 May 03, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1786.IH H1786 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 1786 IH quirement in the permanent establishment tax 1 jurisdiction for regulatory purposes; 2 ‘‘(G) total accumulated earnings, except 3 that accumulated earnings of a permanent es- 4 tablishment must be reported by the legal entity 5 of which it is a permanent establishment; 6 ‘‘(H) total number of employees on a full- 7 time equivalent basis; and 8 ‘‘(I) net book value of tangible assets, 9 which, for purposes of this section, does not in- 10 clude cash or cash equivalents, intangibles, or 11 financial assets. 12 ‘‘(3) AVAILABILITY OF INFORMATION.—The 13 Commission shall make the information filed with 14 the Commission pursuant to this subsection publicly 15 available through the Commission website in a man- 16 ner that is searchable, sortable, and downloadable.’’. 17 (b) EFFECTIVE DATE.—The amendment made by 18 this section shall apply to disclosures made after the date 19 of the enactment of this Act. 20 SEC. 104. PENALTY FOR ELECTION TO PAY TAX ON DE- 21 FERRED FOREIGN INCOME IN INSTALL- 22 MENTS. 23 (a) IN GENERAL.—Section 965(h) is amended by 24 adding at the end the following new paragraph: 25 VerDate Sep 11 2014 19:48 May 03, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1786.IH H1786 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 1786 IH ‘‘(7) PENALTY.—Interest on installments under 1 this subsection shall be payable as determined under 2 section 6601 by treating the last date prescribed for 3 payment for any installment as the date for payment 4 of the first installment under this subsection.’’. 5 (b) EFFECTIVE DATE.—The amendment made by 6 subsection (a) shall take effect as if included in section 7 14103 of Public Law 115–97. 8 SEC. 105. MODIFICATIONS TO BASE EROSION AND ANTI- 9 ABUSE TAX. 10 (a) REDUCTION OF EXEMPTION BASED ON ANNUAL 11 GROSS RECEIPTS.—Section 59A(e)(1)(B) is amended by 12 striking ‘‘$500,000,000’’ and inserting ‘‘$100,000,000’’. 13 (b) ELIMINATION OF EXCEPTION BASED ON BASE 14 EROSION PERCENTAGE.—Section 59(e)(1) is amended by 15 inserting ‘‘and’’ at the end of subparagraph (A), by strik- 16 ing ‘‘, and’’ at the end of subparagraph (B) and inserting 17 a period, and by striking subparagraph (C). 18 (c) CERTAIN CAPITALIZED AMOUNTS INCLUDED AS 19 BASE EROSION PAYMENTS.—Section 59A(d) is amended 20 by redesignating paragraphs (4) and (5) as paragraphs 21 (5) and (6), respectively, and by inserting after paragraph 22 (3) the following new paragraph: 23 ‘‘(4) CERTAIN CAPITALIZED AMOUNTS.—Such 24 term shall also include any interest, royalty, or any 25 VerDate Sep 11 2014 19:48 May 03, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1786.IH H1786 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 1786 IH other amount identified by the Secretary that is paid 1 or accrued by the taxpayer to a foreign person which 2 is a related party of the taxpayer and with respect 3 to which the taxpayer increases the value of property 4 under section 1016 or any other provision of this 5 title.’’. 6 (d) EFFECTIVE DATE.—The amendments made by 7 this section shall apply to taxable years beginning after 8 the date of the enactment of this Act. 9 SEC. 106. TREATMENT OF FOREIGN BASE COMPANY OIL RE- 10 LATED INCOME AS SUBPART F INCOME. 11 (a) IN GENERAL.—Section 954(a) is amended by 12 striking ‘‘and’’ at the end of paragraph (2), by striking 13 the period at the end of paragraph (3) and inserting ‘‘, 14 and’’, and by adding at the end the following new para- 15 graph: 16 ‘‘(4) the foreign base company oil related in- 17 come for the taxable year (determined under sub- 18 section (g) and reduced as provided in subsection 19 (b)(5)).’’. 20 (b) FOREIGN BASE COMPANY OIL RELATED IN- 21 COME.—Section 954 is amended by inserting after sub- 22 section (e) the following new subsection: 23 ‘‘(g) FOREIGN BASE COMPANY OIL RELATED IN- 24 COME.—For purposes of this section, the term ‘foreign 25 VerDate Sep 11 2014 19:48 May 03, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1786.IH H1786 pamtmann on DSKBC07HB2PROD with BILLS 10 •HR 1786 IH base company oil related income’ means foreign oil related 1 income (within the meaning of paragraphs (2) and (3) of 2 section 907(c)) other than income derived from a source 3 within a foreign country in connection with— 4 ‘‘(1) oil or gas which was extracted from an oil 5 or gas well located in such foreign country, or 6 ‘‘(2) oil, gas, or a primary product of oil or gas 7 which is sold by the foreign corporation or a related 8 person for use or consumption within such country 9 or is loaded in such country on a vessel or aircraft 10 as fuel for such vessel or aircraft. 11 Such term shall not include any foreign personal holding 12 company income (as defined in subsection (c)).’’. 13 (c) CONFORMING AMENDMENTS.— 14 (1) Section 952(c)(1)(B)(iii) is amended by re- 15 designating subclauses (III) and (IV) as subclauses 16 (IV) and (V), respectively, and by inserting after 17 subclause (II) the following new subclause: 18 ‘‘(III) foreign base company oil 19 related income.’’. 20 (2) Section 954(b) is amended— 21 (A) by striking ‘‘and the foreign base com- 22 pany services income’’ in paragraph (5) and in- 23 serting ‘‘the foreign base company services in- 24 VerDate Sep 11 2014 19:48 May 03, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1786.IH H1786 pamtmann on DSKBC07HB2PROD with BILLS 11 •HR 1786 IH come, and the foreign base company oil related 1 income’’, and 2 (B) by adding at the end the following new 3 paragraph: 4 ‘‘(6) FOREIGN BASE COMPANY OIL RELATED IN- 5 COME NOT TREATED AS ANOTHER KIND OF BASE 6 COMPANY INCOME.—Income of a corporation which 7 is foreign base company oil related income shall not 8 be considered foreign base company income of such 9 corporation under paragraph (2) or (3) of subsection 10 (a).’’. 11 (d) EFFECTIVE DATE.—The amendments made by 12 this section shall apply to taxable years of foreign corpora- 13 tions beginning after the date of the enactment of this 14 Act, and to taxable years of United States shareholders 15 in which or with which such taxable years of foreign cor- 16 porations end. 17 SEC. 107. MODIFICATIONS OF FOREIGN TAX CREDIT RULES 18 APPLICABLE TO DUAL CAPACITY TAXPAYERS. 19 (a) IN GENERAL.—Section 901 of the Internal Rev- 20 enue Code of 1986 is amended by redesignating subsection 21 (n) as subsection (o) and by inserting after subsection (m) 22 the following new subsection: 23 ‘‘(n) SPECIAL RULES RELATING TO DUAL CAPACITY 24 TAXPAYERS.— 25 VerDate Sep 11 2014 19:48 May 03, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1786.IH H1786 pamtmann on DSKBC07HB2PROD with BILLS 12 •HR 1786 IH ‘‘(1) GENERAL RULE.—Notwithstanding any 1 other provision of this chapter, any amount paid or 2 accrued by a dual capacity taxpayer to a foreign 3 country or possession of the United States for any 4 period with respect to combined foreign oil and gas 5 income (as define [Text truncated for display. Full text available on Congress.gov.]