[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 779 Introduced in Senate (IS)]







109th CONGRESS
  1st Session
                                 S. 779

To amend the Internal Revenue Code of 1986 to treat controlled foreign 
    corporations established in tax havens as domestic corporations.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 13, 2005

 Mr. Dorgan (for himself and Mr. Levin) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to treat controlled foreign 
    corporations established in tax havens as domestic corporations.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. TAX TREATMENT OF CONTROLLED FOREIGN CORPORATIONS ESTABLISHED 
              IN TAX HAVENS.

    (a) In General.--Subchapter C of chapter 80 of the Internal Revenue 
Code of 1986 (relating to provisions affecting more than one subtitle) 
is amended by adding at the end the following new section:

``SEC. 7875. CONTROLLED FOREIGN CORPORATIONS IN TAX HAVENS TREATED AS 
              DOMESTIC CORPORATIONS.

    ``(a) General Rule.--If a controlled foreign corporation is a tax-
haven CFC, then, notwithstanding section 7701(a)(4), such corporation 
shall be treated for purposes of this title as a domestic corporation.
    ``(b) Tax-Haven CFC.--For purposes of this section--
            ``(1) In general.--The term `tax-haven CFC' means, with 
        respect to any taxable year, a foreign corporation which--
                    ``(A) was created or organized under the laws of a 
                tax-haven country, and
                    ``(B) is a controlled foreign corporation 
                (determined without regard to this section) for an 
                uninterrupted period of 30 days or more during the 
                taxable year.
            ``(2) Exception.--The term `tax-haven CFC' does not include 
        a foreign corporation for any taxable year if substantially all 
        of its income for the taxable year is derived from the active 
        conduct of trades or businesses within the country under the 
        laws of which the corporation was created or organized.
    ``(c) Tax-Haven Country.--For purposes of this section--
            ``(1) In general.--The term `tax-haven country' means any 
        of the following:


Andorra                                  Guernsey                                 Panama
Anguilla                                 Isle of Man                              Samoa
Antigua and Barbuda                      Jersey                                   San Marino
Aruba                                    Liberia                                  Federation of
Commonwealth of the                      Principality of                            Saint Christ-
  Bahamas                                  Liechtenstein                            opher
Bahrain                                  Republic of the                            and Nevis
Barbados                                   Maldives                               Saint Lucia
Belize                                   Malta                                    Saint Vincent
Bermuda                                  Republic of the                            and the Grena-
British Virgin Islands                     Marshall Islands                         dines
Cayman Islands                           Mauritius                                Republic of the
Cook Islands                             Principality of Monaco                     Seychelles
Cyprus                                   Montserrat                               Tonga
Commonwealth of the                      Republic of Nauru                        Turks and Caicos
  Dominica                               Netherlands                              Republic of
Gibraltar                                  Antilles                                 Vanuatu
Grenada                                  Niue                                     ..............................
 

            ``(2) Secretarial authority.--The Secretary may remove or 
        add a foreign jurisdiction from the list of tax-haven countries 
        under paragraph (1) if the Secretary determines such removal or 
        addition is consistent with the purposes of this section.''.
    (b) Conforming Amendment.--The table of sections for subchapter C 
of chapter 80 of the Internal Revenue Code of 1986 is amended by adding 
at the end the following new item:

``Sec. 7875. Controlled foreign corporations in tax havens treated as 
                            domestic corporations.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.
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