International Competition for American Jobs Act

This bill amends the Internal Revenue Code of 1986 to modify international tax rules, aiming to affect how U.S. multinationals are taxed on foreign income and investments. It makes permanent certain rules for controlled foreign corporations, adjusts deductions for foreign-derived income, modifies the base erosion minimum tax, changes foreign tax credit limitations, and adds new provisions on stock ownership attribution and intangible property transfers.

Sec. 2, Permanent extension of look-thru rule for controlled foreign corporations: The bill makes permanent the rule that excludes certain dividends, interest, rents, and royalties from foreign personal holding company income for controlled foreign corporations, removing the previous expiration date of January 1, 2026.

Sec. 3, Modification of deduction for foreign-derived intangible income and global intangible low-taxed income: The bill sets the deduction for foreign-derived intangible income at 37.5 percent and for global intangible low-taxed income at 50 percent. It also limits expense apportionment to directly related expenses and renames the deduction to "foreign-derived deduction eligible income."

Sec. 4, Modifications to base erosion minimum tax: The bill changes the base erosion minimum tax amount to be determined without regard to credits, allows general business credits to offset this tax, and eliminates certain modifications for taxable years after 2025. It also expands rules to exempt certain payments from being treated as base erosion payments.

Sec. 5, Modification of foreign tax credit limitation baskets: The bill reduces the number of foreign tax credit limitation categories from four to two by eliminating separate baskets for passive category income and foreign branch income. It also establishes rules for allocating deductions to foreign source global intangible low-taxed income.

Sec. 6, Restoration of limitation on downward attribution of stock ownership: The bill prevents U.S. persons from being considered as owning stock owned by non-U.S. persons under constructive ownership rules. It also creates a new category of "foreign controlled United States shareholders" with modified inclusion rules for foreign corporations.

Sec. 7, Carryover of net CFC tested loss: The bill allows U.S. shareholders to carry over net tested losses from controlled foreign corporations to future taxable years, with adjustments for ownership changes.

Sec. 8, Redetermination of foreign taxes and related claims: The bill expands the circumstances under which foreign taxes can be redetermined, including changes in the choice to claim a credit or deduction, and modifies the time period for making such claims.

Sec. 9, Repeal of foreign tax credit haircut for global intangible low-taxed income: The bill removes the 80 percent limitation on foreign taxes deemed paid with respect to global intangible low-taxed income, allowing full credit for such taxes.

Sec. 10, Application of foreign-source dividend deduction to amounts received by controlled foreign corporations: The bill extends the dividends received deduction to certain dividends received by controlled foreign corporations from specified 10-percent owned foreign corporations.

Sec. 11, Elimination of inclusion of foreign base company sales income and foreign base company services income: The bill repeals the inclusion of foreign base company sales income and foreign base company services income in Subpart F income, simplifying the definition of related persons.

Sec. 12, Corporations exempt from Subpart F inclusion for investment in United States property: The bill exempts corporations from the inclusion of income from investments in U.S. property under Section 956, applying only to U.S. shareholders that are not corporations.

Sec. 13, Other modifications relating to foreign tax credit: The bill provides that a foreign tax is treated as an income tax if its predominant character is an income tax, without regard to nexus to the jurisdiction imposing the tax.

Sec. 14, Special rules for transfers of intangible property from controlled foreign corporations to United States shareholders: The bill allows certain distributions of intangible property from controlled foreign corporations to U.S. shareholders to be treated at adjusted basis rather than fair market value, with specific timing and basis adjustments.

Sec. 15, Global intangible low-taxed income determined without regard to certain income derived from services performed in the Virgin Islands: The bill excludes qualified Virgin Islands services income from global intangible low-taxed income for specified U.S. shareholders, with definitions for such income and shareholders.