No Tax Breaks for Outsourcing Act
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed House
- Passed Senate
- To President
- Became Law
Overview
The No Tax Breaks for Outsourcing Act aims to close loopholes that allow U.S. companies to shift profits overseas and avoid paying taxes. It primarily modifies the rules for calculating ‘Controlled Foreign Corporations’ (CFCs) to ensure that income is taxed where it’s actually earned, regardless of where the corporation is based. The bill also limits interest deductions for multinational corporations, reduces tax credits for foreign taxes, and addresses inverted corporations to prevent tax avoidance strategies. It effectively eliminates certain tax benefits previously available for outsourcing activities.
Key provisions
- Redefines CFC tested income to include net CFC tested income instead of global intangible low-taxed income.
- Applies a country-by-country approach to CFC taxation, considering income earned in multiple countries.
- Limits the deduction of interest paid by domestic corporations that are part of an international financial reporting group.
- Addresses inverted corporations by treating them as domestic corporations for tax purposes if management and control are primarily in the U.S.
- Eliminates the reduced tax rate on net CFC tested income and foreign-derived intangible income.
- Modifies the foreign tax credit limitation based on taxable units.
- Prohibits the carryback of foreign tax credits.
- Eliminates the high tax exclusion for foreign base company income and insurance income.
Who is affected
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