Title I — Ending corporate offshore tax avoidance

“(C) Termination—Subparagraph (A) shall not apply to dividends, interest, rents, and royalties received or accrued after the date of the enactment of the Stop Tax Haven Abuse Act.”

“(n) Limitation on deduction of interest by domestic corporations in international financial reporting groups

“(1) In general—In the case of any domestic corporation which is a member of any international financial reporting group, the deduction under this chapter for interest paid or accrued during the taxable year shall not exceed the sum of—

“(A) the allowable percentage of 110 percent of the excess (if any) of—

“(i) the amount of such interest so paid or accrued, over

“(ii) the amount described in subparagraph (B), plus

“(B) the amount of interest includible in gross income of such corporation for such taxable year.

“(2) International financial reporting group

“(A) For purposes of this subsection, the term international financial reporting group means, with respect to any reporting year, any group of entities which—

“(i) includes—

“(I) at least one foreign corporation engaged in a trade or business within the United States, or

“(II) at least one domestic corporation and one foreign corporation,

“(ii) prepares consolidated financial statements with respect to such year, and

“(iii) reports in such statements average annual gross receipts (determined in the aggregate with respect to all entities which are part of such group) for the 3-reporting-year period ending with such reporting year in excess of $100,000,000.

“(B) Rules relating to determination of average gross receipts—For purposes of subparagraph (A)(iii), rules similar to the rules of section 448(c)(3) shall apply.

“(3) Allowable percentage—For purposes of this subsection—

“(A) In general—The term allowable percentage means, with respect to any domestic corporation for any taxable year, the ratio (expressed as a percentage and not greater than 100 percent) of—

“(i) such corporation’s allocable share of the international financial reporting group’s reported net interest expense for the reporting year of such group which ends in or with such taxable year of such corporation, over

“(ii) such corporation’s reported net interest expense for such reporting year of such group.

“(B) Reported net interest expense—The term reported net interest expense means—

“(i) with respect to any international financial reporting group for any reporting year, the excess of—

“(I) the aggregate amount of interest expense reported in such group’s consolidated financial statements for such taxable year, over

“(II) the aggregate amount of interest income reported in such group’s consolidated financial statements for such taxable year, and

“(ii) with respect to any domestic corporation for any reporting year, the excess of—

“(I) the amount of interest expense of such corporation reported in the books and records of the international financial reporting group which are used in preparing such group’s consolidated financial statements for such taxable year, over

“(II) the amount of interest income of such corporation reported in such books and records.

“(C) Allocable share of reported net interest expense—With respect to any domestic corporation which is a member of any international financial reporting group, such corporation’s allocable share of such group’s reported net interest expense for any reporting year is the portion of such expense which bears the same ratio to such expense as—

“(i) the EBITDA of such corporation for such reporting year, bears to

“(ii) the EBITDA of such group for such reporting year.

“(D) EBITDA

“(i) In general—The term EBITDA means, with respect to any reporting year, earnings before interest, taxes, depreciation, and amortization—

“(I) as determined in the international financial reporting group’s consolidated financial statements for such year, or

“(II) for purposes of subparagraph (A)(i), as determined in the books and records of the international financial reporting group which are used in preparing such statements if not determined in such statements.

“(ii) Treatment of disregarded entities—The EBITDA of any domestic corporation shall not fail to include the EBITDA of any entity which is disregarded for purposes of this chapter.

“(iii) Treatment of intra-group distributions—The EBITDA of any domestic corporation shall be determined without regard to any distribution received by such corporation from any other member of the international financial reporting group.

“(E) Special rules for non-positive EBITDA

“(i) Non-positive group EBITDA—In the case of any international financial reporting group the EBITDA of which is zero or less, paragraph (1) shall not apply to any member of such group the EBITDA of which is above zero.

“(ii) Non-positive entity EBITDA—In the case of any group member the EBITDA of which is zero or less, paragraph (1) shall be applied without regard to subparagraph (A) thereof.

“(4) Consolidated financial statement—For purposes of this subsection, the term consolidated financial statement means any consolidated financial statement described in paragraph (2)(A)(ii) if such statement is—

“(A) a financial statement which is certified as being prepared in accordance with generally accepted accounting principles, international financial reporting standards, or any other comparable method of accounting identified by the Secretary, and which is—

“(i) a 10–K (or successor form), or annual statement to shareholders, required to be filed with the United States Securities and Exchange Commission,

“(ii) an audited financial statement which is used for—

“(I) credit purposes,

“(II) reporting to shareholders, partners, or other proprietors, or to beneficiaries, or

“(III) any other substantial nontax purpose,

“(iii) filed with any other Federal or State agency for nontax purposes, but only if there is no statement described in clause (i) or (ii), or

“(B) a financial statement which—

“(i) is used for a purpose described in subclause (I), (II), or (III) of subparagraph (A)(ii), or

“(ii) filed with any regulatory or governmental body (whether domestic or foreign) specified by the Secretary,

“(5) Reporting year—For purposes of this subsection, the term reporting year means, with respect to any international financial reporting group, the year with respect to which the consolidated financial statements are prepared.

“(6) Application to certain entities

“(A) Partnerships—Except as otherwise provided by the Secretary in paragraph (7), this subsection and subsection (o) shall apply to any partnership which is a member of any international financial reporting group under rules similar to the rules of section 163(j)(4).

“(B) Foreign corporations engaged in trade or business within the United States—Except as otherwise provided by the Secretary in paragraph (7), any deduction for interest paid or accrued by a foreign corporation engaged in a trade or business within the United States shall be limited in a manner consistent with the principles of this subsection.

“(C) Consolidated groups—For purposes of this subsection, the members of any group that file (or are required to file) a consolidated return with respect to the tax imposed by chapter 1 for a taxable year shall be treated as a single corporation.

“(7) Regulations—The Secretary may issue such regulations or other guidance as are necessary or appropriate to carry out the purposes of this subsection.”

“(p) Certain corporations managed and controlled in the United States treated as domestic for income tax

“(1) In general—Notwithstanding subsection (a)(4), in the case of a corporation described in paragraph (2) if—

“(A) the corporation would not otherwise be treated as a domestic corporation for purposes of this title, but

“(B) the management and control of the corporation occurs, directly or indirectly, primarily within the United States,

“(2) Corporation described

“(A) In general—A corporation is described in this paragraph if—

“(i) the stock of such corporation is regularly traded on an established securities market, or

“(ii) the aggregate gross assets of such corporation (or any predecessor thereof), including assets under management for investors, whether held directly or indirectly, at any time during the taxable year or any preceding taxable year is $50,000,000 or more.

“(B) General exception—A corporation shall not be treated as described in this paragraph if—

“(i) such corporation was treated as a corporation described in this paragraph in a preceding taxable year,

“(ii) such corporation—

“(I) is not regularly traded on an established securities market, and

“(II) has, and is reasonably expected to continue to have, aggregate gross assets (including assets under management for investors, whether held directly or indirectly) of less than $50,000,000, and

“(iii) the Secretary grants a waiver to such corporation under this subparagraph.

“(3) Management and control

“(A) In general—The Secretary shall prescribe regulations for purposes of determining cases in which the management and control of a corporation is to be treated as occurring primarily within the United States.

“(B) Executive officers and senior management—Such regulations shall provide that—

“(i) the management and control of a corporation shall be treated as occurring primarily within the United States if substantially all of the executive officers and senior management of the corporation who exercise day-to-day responsibility for making decisions involving strategic, financial, and operational policies of the corporation are located primarily within the United States, and

“(ii) individuals who are not executive officers and senior management of the corporation (including individuals who are officers or employees of other corporations in the same chain of corporations as the corporation) shall be treated as executive officers and senior management if such individuals exercise the day-to-day responsibilities of the corporation described in clause (i).

“(C) Corporations primarily holding investment assets—Such regulations shall also provide that the management and control of a corporation shall be treated as occurring primarily within the United States if—

“(i) the assets of such corporation (directly or indirectly) consist primarily of assets being managed on behalf of investors, and

“(ii) decisions about how to invest the assets are made in the United States.”

“(b) Inverted corporations treated as domestic corporations

“(1) In general—Notwithstanding section 7701(a)(4), a foreign corporation shall be treated for purposes of this title as a domestic corporation if—

“(A) such corporation would be a surrogate foreign corporation if subsection (a)(2) were applied by substituting “80 percent” for “60 percent”, or

“(B) such corporation is an inverted domestic corporation.

“(2) Inverted domestic corporation—For purposes of this subsection, a foreign corporation shall be treated as an inverted domestic corporation if, pursuant to a plan (or a series of related transactions)—

“(A) the entity completes after December 22, 2017, the direct or indirect acquisition of—

“(i) substantially all of the properties held directly or indirectly by a domestic corporation, or

“(ii) substantially all of the assets of, or substantially all of the properties constituting a trade or business of, a domestic partnership, and

“(B) after the acquisition, either—

“(i) more than 50 percent of the stock (by vote or value) of the entity is held—

“(I) in the case of an acquisition with respect to a domestic corporation, by former shareholders of the domestic corporation by reason of holding stock in the domestic corporation, or

“(II) in the case of an acquisition with respect to a domestic partnership, by former partners of the domestic partnership by reason of holding a capital or profits interest in the domestic partnership, or

“(ii) the management and control of the expanded affiliated group which includes the entity occurs, directly or indirectly, primarily within the United States, and such expanded affiliated group has significant domestic business activities.

“(3) Exception for corporations with substantial business activities in foreign country of organization—A foreign corporation described in paragraph (2) shall not be treated as an inverted domestic corporation if after the acquisition the expanded affiliated group which includes the entity has substantial business activities in the foreign country in which or under the law of which the entity is created or organized when compared to the total business activities of such expanded affiliated group. For purposes of subsection (a)(2)(B)(iii) and the preceding sentence, the term substantial business activities shall have the meaning given such term under regulations in effect on December 22, 2017, except that the Secretary may issue regulations increasing the threshold percent in any of the tests under such regulations for determining if business activities constitute substantial business activities for purposes of this paragraph.

“(4) Management and control—For purposes of paragraph (2)(B)(ii)—

“(A) In general—The Secretary shall prescribe regulations for purposes of determining cases in which the management and control of an expanded affiliated group is to be treated as occurring, directly or indirectly, primarily within the United States. The regulations prescribed under the preceding sentence shall apply to periods after December 22, 2017.

“(B) Executive officers and senior management—Such regulations shall provide that the management and control of an expanded affiliated group shall be treated as occurring, directly or indirectly, primarily within the United States if substantially all of the executive officers and senior management of the expanded affiliated group who exercise day-to-day responsibility for making decisions involving strategic, financial, and operational policies of the expanded affiliated group are based or primarily located within the United States. Individuals who in fact exercise such day-to-day responsibilities shall be treated as executive officers and senior management regardless of their title.

“(5) Significant domestic business activities—For purposes of paragraph (2)(B)(ii), an expanded affiliated group has significant domestic business activities if at least 25 percent of—

“(A) the employees of the group are based in the United States,

“(B) the employee compensation incurred by the group is incurred with respect to employees based in the United States,

“(C) the assets of the group are located in the United States, or

“(D) the income of the group is derived in the United States,”

“(s) Disclosure of total corporate taxes paid

“(1) Issuer disclosure requirement—Each issuer required to file an annual or quarterly report under subsection (a) shall disclose in that report—

“(A) the total pre-tax profit of the issuer during the period covered by the report;

“(B) the total amount paid by the issuer in State taxes during the period covered by the report;

“(C) the total amount paid by the issuer in Federal taxes during the period covered by the report; and

“(D) the total amount paid by the issuer in foreign taxes during the period covered by the report.

“(2) Disclosure of country-by-country reporting information—Each issuer required to file an annual or quarterly report under subsection (a) shall disclose in that report, for each of its subsidiaries and aggregated on a country-by-country basis—

“(A) revenues generated from transactions with other constituent entities;

“(B) revenues not generated from transactions with other constituent entities;

“(C) profit or loss before income tax;

“(D) total income tax paid on a cash basis to all tax jurisdictions, and any taxes withheld on payments received by the constituent entities;

“(E) total accrued tax expense recorded on taxable profits or losses, reflecting only operations in the relevant annual period and excluding deferred taxes or provisions for uncertain tax liabilities;

“(F) stated capital, except that the stated capital of a permanent establishment must be reported in the tax jurisdiction of residence of the legal entity of which it is a permanent establishment unless there is a defined capital requirement in the permanent establishment tax jurisdiction for regulatory purposes;

“(G) total accumulated earnings, except that accumulated earnings of a permanent establishment must be reported by the legal entity of which it is a permanent establishment;

“(H) total number of employees on a full-time equivalent basis; and

“(I) net book value of tangible assets, which, for purposes of this section, does not include cash or cash equivalents, intangibles, or financial assets.

“(3) Availability of information—The Commission shall make the information filed with the Commission pursuant to this subsection publicly available through the Commission website in a manner that is searchable, sortable, and downloadable.”

“(7) Penalty—Interest on installments under this subsection shall be payable as determined under section 6601 by treating the last date prescribed for payment for any installment as the date for payment of the first installment under this subsection.”