PRIA Logo™
119-hr-1911119th CongressWALLET

To amend the Internal Revenue Code of 1986 to provide that certain payments to foreign related parties subject to sufficient foreign tax are not treated as base erosion payments.

Sponsored By: Representative Conaway, Herbert C. [D-NJ-3]

Introduced

Summary

Creates a 15% effective foreign tax safe harbor that would keep certain cross-border payments to related foreign parties from being treated as base erosion payments under Section 59A of the Internal Revenue Code. The safe harbor would require both the foreign recipient and the payment itself to face an effective foreign income tax rate of at least 15 percent and would set rules for measuring that rate from financial statements with specified adjustments.

Show full summary
  • Multinational companies would be able to avoid base erosion treatment for qualifying payments if the recipient and the payment meet a 15% effective foreign tax test, giving a clearer path for compliance.
  • Foreign affiliates would need to be taxed at an effective rate of at least 15% for payments to qualify, using applicable financial statements with adjustments for items like excluded dividends, large penalties, prior period errors, pension accruals, and illegal payments.
  • The Treasury would get authority to write regulations to define the effective rate, list required adjustments, and add anti‑abuse rules such as recharacterizing related‑party transactions.
  • These rules would apply to taxable years beginning after enactment, creating a new test firms must meet to avoid base erosion rules.

Personalized for You

How does this bill affect your finances?

Personalize government policy and PRIA will tell you what this bill means for your household, plus every other piece of legislation we track. PRIA reads each provision against your financial profile to show you exactly what matters to your wallet.

Free to download

Bill Overview

Analyzed Economic Effects

1 provisions identified: 1 benefits, 0 costs, 0 mixed.

Business tax safe harbor on foreign payments

If enacted, some payments your company makes to a related foreign affiliate would not count as base erosion payments. To qualify, both the foreign affiliate and the specific payment would need at least a 15% effective foreign income tax rate. You would need to show this using applicable financial statements, with IRS-allowed adjustments. Treasury and the IRS would set procedures to compute the rate and prevent tax avoidance. This would apply to tax years starting after the date of enactment.

Sponsors & CoSponsors

Sponsor

Conaway, Herbert C. [D-NJ-3]

NJ • D

Cosponsors

  • Rep. Suozzi, Thomas R. [D-NY-3]

    NY • D

    Sponsored 3/6/2025

  • Rep. Van Drew, Jefferson [R-NJ-2]

    NJ • R

    Sponsored 3/6/2025

Roll Call Votes

No roll call votes available for this bill.

View on Congress.gov
Back to Legislation