[Congressional Record Volume 170, Number 115 (Thursday, July 11, 2024)]
[Senate]
[Page S4834]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

  SA 2508. Mr. RUBIO submitted an amendment intended to be proposed by 
him to the bill S. 4638, to authorize appropriations for fiscal year 
2025 for military activities of the Department of Defense, for military 
construction, and for defense activities of the Department of Energy, 
to prescribe military personnel strengths for such fiscal year, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the appropriate place in subtitle H of title X, add the 
     following:

     SEC. ____. 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 this subsection).
       ``(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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