[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 3486 Introduced in Senate (IS)]

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118th CONGRESS
  1st Session
                                S. 3486

   To amend the Internal Revenue Code of 1986 to disallow companies 
    associated with foreign adversaries from receiving the advanced 
                    manufacturing production credit.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           December 13, 2023

   Mr. Rubio 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 disallow companies 
    associated with foreign adversaries from receiving the advanced 
                    manufacturing production credit.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Protecting American Advanced 
Manufacturing Act''.

SEC. 2. PROHIBITION ON ALLOWANCE OF ADVANCED MANUFACTURING PRODUCTION 
              CREDIT FOR ELIGIBLE COMPONENTS PRODUCED BY COMPANIES 
              ASSOCIATED WITH FOREIGN ADVERSARIES.

    (a) In General.--Section 45X of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(e) Prohibition on Allowance of Credit for Eligible Components 
Produced by Companies Associated With Foreign Adversaries.--
            ``(1) In general.--No credit shall be allowed under 
        subsection (a) with respect to any eligible component which is 
        produced by a disqualified entity.
            ``(2) Disqualified entity.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `disqualified entity' means any entity 
                described in subparagraphs (B) through (D).
                    ``(B) Foreign adversary parties.--The entities 
                described in this subparagraph consist of the 
                following:
                            ``(i) The government of a foreign 
                        adversary, any agency or government 
                        instrumentality of a foreign adversary, or any 
                        entity which is directly or indirectly owned, 
                        controlled, or directed by any such government, 
                        agency, or government instrumentality.
                            ``(ii) Any entity organized under the laws 
                        of a foreign adversary (or any political 
                        subdivision thereof) or whose headquarters is 
                        located within a foreign adversary.
                    ``(C) Owned, controlled, directed, or influenced by 
                foreign adversary parties.--The entities described in 
                this subparagraph consist of the following:
                            ``(i) Any entity for which, on any date 
                        during the taxable year, not less than 10 
                        percent of the outstanding equity interests (by 
                        value, voting, governance, board appointment, 
                        or similar rights or influence) are held 
                        directly or indirectly by, or on behalf of, 1 
                        or more of the entities described in 
                        subparagraph (B), including through interests 
                        in co-investment vehicles, joint ventures, or 
                        similar arrangements.
                            ``(ii) Any entity which is directly or 
                        indirectly controlled, directed, or materially 
                        influenced by any entity described in 
                        subparagraph (B).
                            ``(iii) Any entity for which the actions, 
                        management, ownership, or operations of such 
                        entity are subject to the direct influence of 
                        an entity described in subparagraph (B).
                            ``(iv) Any entity for which an interest in 
                        such entity is held by an entity described in 
                        subparagraph (B) (referred to in this clause as 
                        the `beneficiary firm') as a derivative 
                        financial instrument or through a contractual 
                        arrangement between the beneficiary firm and 
                        such entity, including any financial instrument 
                        or other contract between the beneficiary firm 
                        and the entity which seeks to replicate any 
                        financial return with respect to such entity or 
                        interest in such entity.
                    ``(D) Debt or other arrangements with foreign 
                adversary parties.--
                            ``(i) In general.--An entity is described 
                        in this subparagraph if, as a result of any 
                        prohibited obligation or arrangement--
                                    ``(I) the actions, management, or 
                                operations of such entity are subject 
                                to the direct or indirect influence of 
                                1 or more entities described in 
                                subparagraph (B) or (C), or
                                    ``(II) such entity provides a 
                                substantial benefit to 1 or more 
                                entities described in subparagraph (B) 
                                or (C).
                            ``(ii) Prohibited obligation or 
                        arrangement.--For purposes of this 
                        subparagraph, the term `prohibited obligation 
                        or arrangement' means any--
                                    ``(I) debt,
                                    ``(II) lease or sublease 
                                arrangement,
                                    ``(III) management or operating 
                                arrangement,
                                    ``(IV) contract manufacturing 
                                arrangement,
                                    ``(V) license or sublicense 
                                agreement, or
                                    ``(VI) financial derivative.
                            ``(iii) Exception.--For purposes of clause 
                        (i)(II), the purchase of equipment or 
                        manufacturing inputs in an arm's-length 
                        transaction shall not, in and of itself, be 
                        deemed to provide a substantial benefit.
                    ``(E) Other definitions.--For purposes of this 
                paragraph--
                            ``(i) Control.--The term `control' has the 
                        meaning given in section 800.208 of title 31, 
                        Code of Federal Regulations (as in effect on 
                        the date of enactment of the Protecting 
                        American Advanced Manufacturing Act).
                            ``(ii) Foreign adversary.--The term 
                        `foreign adversary' has the meaning given the 
                        term `covered nation' in section 4872(d)(2) of 
                        title 10, United States Code.
            ``(3) Administration.--The Secretary may issue such 
        guidance as is necessary to carry out the purposes of this 
        subsection, including establishment of rules for--
                    ``(A) implementation of paragraph (2)(C)(i) for 
                determination of whether the percentage requirements 
                with respect to outstanding equity interests have been 
                satisfied in the case of an entity for which the stock 
                of such entity is traded on an established securities 
                market in the United States or any foreign country, and
                    ``(B) preventing entities from evading, 
                circumventing, or abusing the application of the 
                requirements under this subsection.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of enactment of this Act.
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