[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 396 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                 S. 396

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

                            January 25, 2007

 Mr. Dorgan (for himself, Mr. Levin, and Mr. Feingold) 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
British Virgin Islands                  Marshall Islands                      Grenadines
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, 2008.
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