[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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