115 S1605 IS: International Competition for American Jobs Act
U.S. Senate
2025-05-06
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
II
119th CONGRESS
1st Session
S. 1605
IN THE SENATE OF THE UNITED STATES
May 6, 2025
Mr. Tillis 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 modify certain provisions relating to the taxation of international entities.
1.

Short title, etc
(a)

Short title
This Act may be cited as the “International Competition for American Jobs Act”.
(b)

Amendment of 1986 code
Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.
2.

Permanent extension of look-thru rule for controlled foreign corporations
(a)

In general
Section 954(c)(6)(C) is amended by striking “and before January 1, 2026,”.
(b)

Effective date
The amendment made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2025, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end.
3.

Modification of deduction for foreign-derived intangible income and global intangible low-taxed income
(a)

In general
Section 250(a) is amended to read as follows:
“(a)

Allowance of deduction
In the case of a domestic corporation for any taxable year, there shall be allowed as a deduction an amount equal to the sum of—
(1)
37.5 percent of the foreign-derived intangible income of such domestic corporation for such taxable year, plus
(2)
50 percent of—
(A)
the global intangible low-taxed income amount (if any) which is included in the gross income of such domestic corporation under section 951A for such taxable year, and
(B)
the amount treated as a dividend received by such corporation under section 78 which is attributable to the amount described in subparagraph (A).”.
(b)

Deduction not To apply against dividends received deduction limitation
Section 246(b)(1) is amended by striking “subsection (a) and (b) of section 245, and section 250” the first place it appears and inserting “and subsection (a) and (b) of section 245”.
(c)

Deduction taken into account in determining net operating loss deduction
Section 172(d) is amended by striking paragraph (9).
(d)

Expense apportionment limited to directly related expenses
Section 250(b)(3)(A)(ii) is amended to read as follows:
“(ii)
expenses and deductions (including taxes) directly related to such gross income.”.
(e)

Deduction for foreign-Derived deduction eligible income
(1)

In general
Section 250(a)(1), as amended by subsection (a), is amended by striking “foreign-derived intangible income” and inserting “foreign-derived deduction eligible income”.
(2)

Conforming amendments
(A)
Section 250(b), as amended by subsection (c), is amended—
(i)
by striking paragraphs (1) and (2),
(ii)
by redesignating paragraphs (4) and (5) as paragraphs (1) and (2), respectively, and by moving such paragraphs before paragraph (3),
(iii)
in paragraph (2)(B)(ii), as so redesignated, by striking “paragraph (4)(B)” and inserting “paragraph (1)(B)”, and
(iv)
by striking “intangible” in the heading thereof and inserting “deduction eligible”.
(B)
(i)
The heading for section 250 is amended by striking “intangible” in the heading thereof and inserting “deduction eligible”.
(ii)
The item relating to section 250 in the table of sections for part VIII of subchapter B of chapter 1 is amended by striking “intangible” and inserting “deduction eligible”.
(f)

Look-Thru for interest payments
Section 250(b)(2), as redesignated under subsection (e), is amended by adding at the end the following:
“For purposes of this subsection, foreign-derived deduction eligible income shall include interest paid by a controlled foreign corporation to corporation that is a United States shareholder with respect to such foreign corporation if such controlled foreign corporation is related (within the meaning of section 954(d)) to such United States shareholder and such interest is an amount which is described in section 951A(c)(2)(A)(ii) with respect to such controlled foreign corporation. To the extent provided by the Secretary in regulations, the preceding sentence shall not apply to interest paid by a controlled foreign corporation to a related United States shareholder if such interest is directly related to interest expense of such shareholder (or another related person).”.
(g)

Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
4.

Modifications to base erosion minimum tax
(a)

Base erosion minimum tax amount determined without regard to credits
(1)

In general
Section 59A(b)(1)(B) is amended to read as follows:
“(B)
an amount equal to the regular tax liability (as defined in section 26(b)) of the taxpayer for the taxable year.”.
(2)

Conforming amendment
Section 59A(b) is amended by striking paragraph (4).
(b)

Application of general business credit against beat
The second sentence of section 38(c)(1) is amended by striking “and the tax imposed by section 55” and inserting “, the tax imposed by section 55, and the tax imposed by section 59A”.
(c)

Elimination of modifications for taxable years after 2025
(1)

In general
Section 59A(b) is amended by striking paragraph (2) and redesignating paragraph (3) as paragraph (2).
(2)

Conforming amendments
(A)
Section 59A(b)(1) is amended by striking “paragraphs (2) and (3)” and inserting “paragraph (2)”.
(B)
Paragraph (2) of section 59A(b), as redesignated by paragraph (1), is amended by striking “under paragraphs (1)(A) and (2)(A) shall each be increased” and inserting “under paragraph (1)(A) shall be increased”.
(C)
Section 59A(e)(1)(C) is amended by striking “subsection (b)(3)(B)” and inserting “subsection (b)(2)(B)”.
(d)

Expansion and consolidation of rules To exempt certain payments from treatment as base erosion payments
(1)

In general
Section 59A is amended by redesignating subsection (i) as subsection (j) and by inserting after subsection (h) the following new subsection:
“(i)

Certain payments not treated as base erosion payments
(1)

Exception for payments on which tax is imposed
(A)

In general
An amount shall not be treated as a base erosion payment if tax is (or was at the time of payment or accrual) imposed by this chapter with respect to such amount (other than by this section).
(B)

Treatment of certain deductions
For purposes of subparagraph (A), tax shall be treated as imposed by this chapter without regard to any deduction allowed under part VIII of subchapter B.
(C)

Application of certain rules
The amount not treated as a base erosion payment by reason of this paragraph shall be determined under rules similar to the rules of section 163(j)(5) (as in effect before the date of the enactment of Public Law 115–97).
(2)

Exception for certain payments subject to sufficient foreign tax
(A)

In general
An amount shall not be treated as a base erosion payment if the taxpayer establishes to the satisfaction of the Secretary that such amount was made to a foreign person which is a related party of the taxpayer that is subject to an effective rate of foreign income tax (as defined in section 904(d)(2)(F)) which is not less than 18.9 percent.
(B)

Certain payments to related parties
To the extent provided by the Secretary in regulations, an amount paid to a foreign person which is a related party of the taxpayer shall be treated as paid to another foreign person which is a related party of the taxpayer if such second foreign person is subject to an effective rate of foreign income tax (as defined in section 904(d)(2)(F)) which is less than 18.9 percent, to the extent the amount so paid directly or indirectly funds a payment to such second foreign person.
(C)

Determination on basis of applicable financial statements
Except as otherwise provided by the Secretary under subparagraph (D), the effective rate of foreign income tax with respect to any amount may be established on the basis of applicable financial statements (as defined in section 451(b)(3)).
(D)

Regulations
The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this paragraph, including regulations or other guidance providing procedures for determining the effective rate of foreign income tax to which any amount is subject. Such procedures may require that any transaction or series of transactions among multiple parties be recharacterized as one or more transactions directly among any 2 or more of such parties where the Secretary determines that such recharacterization is appropriate to carry out, or prevent avoidance of, the purposes of this section.
(3)

Exception for certain amounts with respect to services
Subsections (d)(1) and (d)(2) shall not apply to so much of any amount paid or accrued by a taxpayer for services as does not exceed the total services cost of such services. The preceding sentence shall not apply unless such services meet the requirements for eligibility for use of the services cost method under section 482 (determined without regard to the requirement that the services not contribute significantly to fundamental risks of business success or failure).”.
(2)

Conforming amendment
Section 59A(d) is amended by striking paragraph (5).
(e)

Other modifications
(1)
Section 59A(b)(3)(B)(ii) is amended by striking “registered securities dealer” and inserting “securities dealer registered”.
(2)
Section 59A(h)(2)(B) is amended by striking “section 6038B(b)(2)” and inserting “section 6038A(b)(2)”.
(3)
Section 59A(j)(2), as redesignated by subsection (c), is amended by striking “subsection (g)(3)” and inserting “subsection (h)(3)”.
(f)

Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
5.

Modification of foreign tax credit limitation baskets
(a)

Modification of foreign tax credit limitation baskets
(1)

In general
Section 904(d)(1) is amended by striking subparagraphs (A) and (B) and by redesignating subparagraphs (C) and (D) as subparagraphs (A) and (B), respectively.
(2)

Conforming amendments
(A)
Section 904(d)(2)(A)(ii) is amended by striking “income described in paragraph (1)(A), foreign branch income, and”.
(B)
Section 904(c) is amended by striking the last sentence.
(C)
(i)
Section 904(d)(2) is amended by striking subparagraph (J) and by redesignating subparagraph (K) as subparagraph (J).
(ii)
Section 250(b)(3)(A)(i)(VI) is amended to read as follows:
“(VI)
the business profits of such corporation which are attributable (under rules established by the Secretary) to 1 or more qualified business units (as defined in section 989(a)) in 1 or more foreign countries, over”.
(D)
Section 904(d)(2)(J), as redesignated by subparagraph (C)(i), is amended by striking “2007” each place it appears in the text and in the heading and inserting “2026”.
(3)

Transition rule
The Secretary of the Treasury (or the Secretary's delegate) shall establish rules for the application of section 960(c)(2) with respect to categories of income described in subparagraphs (A) and (B) of section 904(d)(2) (as in effect for taxable years beginning before January 1, 2026).
(b)

Rules for allocation of certain deductions to foreign source global intangible low-taxed income for purposes of foreign tax credit limitation
Section 904(b) is amended by adding at the end the following new paragraph:
“(5)

Deductions treated as allocable to foreign source global intangible low-taxed income
In the case of a domestic corporation and solely for purposes of the application of subsection (a) with respect to amounts includible inc gross income by reason of section 951A (other than passive category income), the taxpayer’s taxable income from sources without the United States shall be determined—
(A)
by allocating and apportioning any deduction allowed under section 250(a)(2) (and any deduction allowed under section 164(a)(3) for taxes imposed on amounts described in section 250(a)(2)) to such income, and
(B)
by allocating and apportioning any other deduction to such income only if the Secretary determines that such deduction is directly allocable to such income.
Any deduction which would (but for subparagraph (B)) have been allocated or apportioned to such income shall only be allocated or apportioned to income which is from sources within the United States.”.
(c)

Effective date
(1)

In general
Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 2025.
(2)

Modification of foreign tax credit carryback and carryforward
The amendment made by subsection (a)(2)(B) shall apply to taxes paid or accrued in taxable years beginning after December 31, 2025.
6.

Restoration of limitation on downward attribution of stock ownership in applying constructive ownership rules
(a)

In general
Section 958(b) is amended—
(1)
by inserting after paragraph (3) the following:
“(4)
Subparagraphs (A), (B), and (C) of section 318(a)(3) shall not be applied so as to consider a United States person as owning stock which is owned by a person who is not a United States person.”, and
(2)
by striking “Paragraph (1)” in the last sentence and inserting “Paragraphs (1) and (4)”.
(b)

Foreign controlled United States shareholders
Subpart F of part III of subchapter N of chapter 1 is amended by inserting after section 951A the following new section:
“951B.

Amounts included in gross income of foreign controlled United States shareholders
(a)

In general
In the case of any foreign controlled United States shareholder of a foreign controlled foreign corporation—
(1)
this subpart (other than sections 951A, 951(b), and 957) shall be applied with respect to such shareholder (separately from, and in addition to, the application of this subpart without regard to this section)—
(A)
by substituting “foreign controlled United States shareholder” for “United States shareholder” each place it appears therein, and
(B)
by substituting “foreign controlled foreign corporation” for “controlled foreign corporation” each place it appears therein, and
(2)
section 951A shall be applied with respect to such shareholder—
(A)
by treating each reference to “United States shareholder” in such section as including a reference to such shareholder, and
(B)
by treating each reference to “controlled foreign corporation” in such section as including a reference to such foreign controlled foreign corporation.
(b)

Foreign controlled United States shareholder
For purposes of this section, the term “foreign controlled United States shareholder” means, with respect to any foreign corporation, any United States person which would be a United States shareholder with respect to such foreign corporation if—
(1)
section 951(b) were applied by substituting “more than 50 percent” for “10 percent or more”, and
(2)
section 958(b) were applied without regard to paragraph (4) thereof.
(c)

Foreign controlled foreign corporation
For purposes of this section, the term “foreign controlled foreign corporation” means a foreign corporation, other than a controlled foreign corporation, which would be a controlled foreign corporation if section 957(a) were applied—
(1)
by substituting “foreign controlled United States shareholders” for “United States shareholders”, and
(2)
by substituting “section 958(b) (other than paragraph (4) thereof)” for “section 958(b)”.
(d)

Regulations
The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including regulations or other guidance—
(1)
to treat a foreign controlled United States shareholder or a foreign controlled foreign corporation as a United States shareholder or as a controlled foreign corporation, respectively, for purposes of provisions of this title other than this subpart, and
(2)
to prevent the avoidance of the purposes of this section.”.
(c)

Clerical amendment
The table of sections for subpart F of part III of subchapter N of chapter 1 is amended by inserting after the item relating to section 951A the following new item:
“Sec. 951B. Amounts included in gross income of foreign controlled United States shareholders.”.
(d)

Effective date
The amendments made by this section shall apply to—
(1)
the last taxable year of foreign corporations beginning before January 1, 2026, and each subsequent taxable year of such foreign corporations, and
(2)
taxable years of United States persons in which or with which such taxable years of foreign corporations end.
(e)

No inference
The amendments made by this section shall not be construed to create any inference with respect to the proper application of any provision of the Internal Revenue Code of 1986 with respect to taxable years beginning before the taxable years to which such amendments apply.
7.

Carryover of net CFC tested loss
(a)

In general
Section 951A(c) is amended by adding at the end the following new paragraph:
“(3)

Carryover of net CFC tested loss
(A)

In general
If the amount described in paragraph (1)(B) with respect to any United States shareholder for any taxable year of such United States shareholder (determined after the application of this paragraph with respect to amounts arising in preceding taxable years) exceeds the amount described in paragraph (1)(A) with respect to such shareholder of such taxable year, the amount otherwise described in paragraph (1)(B) with respect to such shareholder for the succeeding taxable year shall be increased by the amount of such excess.
(B)

Proper adjustment in allocations of global intangible low-taxed income to controlled foreign corporations
Proper adjustments shall be made in the application of subsection (f)(2)(B) to take into account any decrease in global intangible low-taxed income by reason of the application of subparagraph (A).”.
(b)

Application of rules with respect to ownership changes
Section 382(d) is amended by adding at the end the following new paragraph:
“(4)

Application to carryover of net CFC tested loss
The term “pre-change loss” shall include any excess carried over under section 951A(c)(3) under rules similar to the rules of paragraph (1).”.
(c)

Effective date
The amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2025, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.
8.

Redetermination of foreign taxes and related claims
(a)

In general
Section 905(c) is amended—
(1)
in paragraph (1), by striking “or” at the end of subparagraph (B) and by inserting after subparagraph (C) the following new subparagraphs:
“(D)
the taxpayer makes a timely change in its choice to claim a credit or deduction for taxes paid or accrued, or
(E)
there is any other change in the amount, or treatment, of taxes, which affects the taxpayer’s tax liability under this chapter,”,
(2)
in paragraph (2)(B)(i), by inserting “, except as otherwise provided by the Secretary,” after “shall”, and
(3)
by striking “accrued” in the heading thereof.
(b)

Modification to time for claiming credit or deduction
Section 901(a) is amended by striking the second sentence and inserting the following: “Such choice for any taxable year may be made or changed at any time before the expiration of the applicable period prescribed by section 6511 for making a claim for credit or refund of an overpayment of the tax imposed by this chapter for such taxable year that is attributable to such amounts.”.
(c)

Modification to special period of limitation
Section 6511(d)(3) is amended—
(1)
in subparagraph (A)—
(A)
by inserting “a change in the liability for” before “any taxes paid or accrued”,
(B)
by striking “actually paid” and inserting “paid (or deemed paid under section 960)”, and
(C)
by inserting “change in the liability for” before “foreign taxes” in the heading thereof, and
(2)
in subparagraph (B), by striking “the allowance of a credit for the taxes” and inserting “the allowance of an additional credit by reason of the change in liability for the taxes”.
(d)

Effective date
(1)

In general
Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxes paid or accrued in taxable years beginning after December 31, 2025.
(2)

Certain changes
The amendments made by paragraphs (1) and (3) of subsection (a) shall apply to changes that occur on or after the date which is 60 days after the date of the enactment of this Act.
(3)

Modification to special period of limitation
The amendments made by subsection (c) shall apply to taxes paid, accrued, or deemed paid in taxable years beginning after December 31, 2025.
9.

Repeal of foreign tax credit haircut for global intangible low-taxed income
(a)

In general
Section 960(d)(1) is amended by striking “80 percent of”.
(b)

Conforming amendment
Section 78 is amended by striking “(determined without regard to the phrase “80 percent of” in subsection (d)(1) thereof)”.
(c)

Effective date
The amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2025, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.
10.

Application of foreign-source dividend deduction to amounts received by controlled foreign corporations
(a)

In general
Section 245A is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection:
“(g)

Application to certain dividends received by controlled foreign corporations from specified 10-Percent owned foreign corporations
Except as otherwise provided by the Secretary in regulations or other guidance, if a controlled foreign corporation with respect to which a domestic corporation is a United States shareholder receives a dividend (other than a hybrid dividend) from a specified 10-percent owned foreign corporation with respect to which such domestic corporation is also a United States shareholder, the amount includible in the gross income of such United States shareholder under section 951(a)(1)(A) by reason of the foreign-source portion of such dividend shall be treated for purposes of this section in the same manner as if such amount were the foreign-source portion of a dividend received by such United States shareholder from such specified 10-percent owned foreign corporation.”.
(b)

Effective date
The amendments made by this section shall apply to distributions made in taxable years of foreign corporations beginning after December 31, 2025, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.
(c)

No inference
Nothing in the amendments made by subsection (a) shall be construed to create any inference with respect to the treatment of dividends described in section 245A(g) of the Internal Revenue Code of 1986 (as added by subsection (a)) in taxable years beginning before the taxable year described in subsection (b).
11.

Elimination of inclusion of foreign base company sales income and foreign base company services income
(a)

Repeal
Subsection (a) of section 954 is amended—
(1)
by striking “the sum of” and all that follows through “the foreign personal holding company income” in paragraph (1) and inserting “the foreign personal holding company income”,
(2)
by striking the comma after “subsection (c) and reduced as provided in subsection (b)(5))” and inserting a period, and
(3)
by striking paragraphs (2) and (3).
(b)

Conforming amendments
(1)
(A)
Section 954(d) is amended to read as follows:
“(d)

Related person defined
For purposes of this section, a person is a related person with respect to a controlled foreign corporation, if—
(1)
such person is an individual, corporation, partnership, trust, or estate which controls, or is controlled by, the controlled foreign corporation, or
(2)
such person is a corporation, partnership, trust, or estate which is controlled by the same person or persons which control the controlled foreign corporation.
For purposes of the preceding sentence, control means, with respect to a corporation, the ownership, directly or indirectly, of stock possessing more than 50 percent of the total voting power of all classes of stock entitled to vote or of the total value of stock of such corporation. In the case of a partnership, trust, or estate, control means the ownership, directly or indirectly, of more than 50 percent (by value) of the beneficial interests in such partnership, trust, or estate. For purposes of this subsection, rules similar to the rules of section 958 shall apply.”.
(B)
The following sections are amended by striking “954(d)(3)” each place it appears and inserting “954(d)”:
(i)
Section 162(r)(6)(B)(ii).
(ii)
Section 250(b)(2)(D) (as redesignated by section 3).
(iii)
Section 267A(b)(2).
(iv)
Section 904(d)(2)(I).
(v)
Section 951A(c)(2)(A)(i)(IV).
(vi)
Section 953.
(vii)
Section 956(c)(2)(L)(ii)(II).
(viii)
Section 958(b).
(ix)
Section 971(f).
(x)
Section 988(a)(3)(C).
(xi)
Section 1297(b)(2).
(xii)
Subsections (d)(3)(A) and (e)(2)(B)(i) of section 1298.
(xiii)
Section 1471(e)(2).
(xiv)
Section 3121(z)(2).
(C)
Section 954(h)(5)(E) is amended by striking “subsection (d)(3)” and inserting “subsection (d)”.
(D)
Subparagraphs (A) and (B) of section 954(i)(2) are each amended by striking “subsection (d)(3)” and inserting “subsection (d)”.
(2)
Section 954 is amended by striking subsections (e) and (g).
(c)

Effective date
The amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2025, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end.
12.

Corporations exempt from subpart F inclusion for investment in United States property
(a)

In general
Section 956(a) is amended by inserting “(other than a corporation)” after “United States shareholder” in the matter preceding paragraph (1).
(b)

Effective date
The amendment made by this section shall apply to taxable years of controlled foreign corporations ending after December 31, 2025, and to taxable years of United States shareholders with or within which such taxable years of controlled foreign corporations end.
13.

Other modifications relating to foreign tax credit
(a)

Creditable taxes
Section 901 is amended by redesignating subsection (n) as subsection (o) and by inserting after subsection (m) the following new subsection:
“(n)

Determination of income taxes
For purposes of this section, a foreign tax shall be treated as an income tax if the predominant character of the tax is an income tax. The determinations made under the preceding sentence and under section 903 shall be made without regard to whether the income or other base of the tax bears a nexus to the jurisdiction imposing the tax.”.
(b)

Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
14.

Special rules for transfers of intangible property from controlled foreign corporations to United States shareholders
(a)

In general
Subpart F of part III of subchapter N of chapter 1 is amended by adding at the end the following new section:
“966.

Transfers of intangible property to United States shareholders
(a)

In general
In the case of any distribution of intangible property which is held by a controlled foreign corporation on the date of enactment of this section and which is described in subsection (b)—
(1)
for purposes of part I of subchapter C and any other provision of this title specified by the Secretary, the fair market value of such property on the date of such distribution shall be treated as not exceeding the adjusted basis of such property immediately before such distribution, and
(2)
if the distribution is not a dividend—
(A)
the United States shareholder’s adjusted basis in the stock of the controlled foreign corporation with respect to which such distribution is made shall be increased by the amount (if any) of such distribution which would (but for this subsection) be includible in gross income, and
(B)
the adjusted basis of such property in the hands of such United States shareholder immediately after such distribution shall be such adjusted basis immediately before such distribution reduced by the amount of the increase described in subparagraph (A).
(b)

Distribution
A distribution is described in this section if the distribution is—
(1)
received by a domestic corporation from a controlled foreign corporation with respect to which such corporation is a United States shareholder, and
(2)
made by the controlled foreign corporation before the last day of the third taxable year of the controlled foreign corporation beginning after December 31, 2025.
(c)

Intangible property
For purposes of this subsection, the term intangible property has the meaning given such term by section 367(d)(4) or which is computer software described in section 197(e)(3)(B).”.
(b)

Conforming amendments
(1)
Section 197(f)(2)(B)(i) is amended by inserting “966(a),” after “731,”.
(2)
The table of sections for subpart F of part III of subchapter N of chapter 1 is amended by adding at the end the following new item:
“Sec. 966. Transfers of intangible property to United States shareholders.”.
(c)

Effective date
The amendments made by this section shall apply to distributions made in taxable years of foreign corporations beginning after December 31, 2025, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.
15.

Global intangible low-taxed income determined without regard to certain income derived from services performed in the Virgin Islands
(a)

In general
Section 951A(c)(2)(A)(i) is amended by striking “and” at the end of subclause (IV), by striking the period at the end of subclause (V) and inserting “, and”, and by adding at the end the following new subclause:
“(VI)
in the case of any specified United States shareholder, any qualified Virgin Islands services income.”.
(b)

Definitions and special rules
Section 951A(c)(2) is amended by adding at the end the following new subparagraph:
“(C)

Provisions related to qualified Virgin Islands services income
For purposes of subparagraph (A)(i)(VI)—
(i)

Qualified Virgin Islands services income
The term “qualified Virgin Islands services income” means any gross income which satisfies all of the following requirements:
(I)
Such gross income is compensation for labor or personal services (within the meaning of section 862(a)(3)) performed in the Virgin Islands by a corporation formed under the laws of the Virgin Islands.
(II)
Such gross income is attributable to services performed from within the Virgin Islands by individuals for the benefit of such corporation.
(III)
Such gross income is effectively connected with the conduct of a trade or business within the Virgin Islands.
(ii)

Specified United States shareholder
The term “specified United States shareholder” means any United States shareholder which is—
(I)
an individual, trust, or estate, or
(II)
a closely held C corporation (as defined in section 469(j)(1)) if such corporation acquired its direct or indirect equity interest in the foreign corporation which derived the qualified Virgin Islands services income before December 31, 2023.
(iii)

Regulations
The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out this subparagraph and subparagraph (A)(i)(VI), including regulations or other guidance to prevent the abuse of such subparagraphs.”.
(c)

Effective date
The amendments made by this section shall apply to taxable years of foreign corporations beginning after the date of the enactment of this Act, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end.