H.R. 363 · 119th Congress
Territorial Economic Recovery Act
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D
PlaskettSponsorNo cosponsors.
This bill excludes the income of certain controlled foreign corporations in U.S. territories from the calculation of global intangible low-taxed income (GILTI) for federal tax purposes.
What it does: CRS summary · Introduced in House · Jan 13, 2025
Territorial Economic Recovery Act
This bill excludes the income of certain controlled foreign corporations in U.S. territories from the calculation of global intangible low-taxed income (GILTI) for federal tax purposes.
Under current law, a U.S. shareholder of a controlled foreign corporation is required to include in gross income the GILTI of the shareholder. The calculation of GILTI is based, in part, on the controlled foreign corporation’s tested income (the controlled foreign corporation’s gross income less certain exclusions).
Under the bill, the income from a qualified possession corporation that is effectively connected with an active trade or business within a U.S. territory (Puerto Rico, U.S. Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands) is excluded from gross income for purposes of calculating a controlled foreign corporation’s tested income.
The bill defines a qualified possession corporation as any controlled foreign corporation if, for a three-year period ending in the prior tax year (or for the existence of the controlled foreign corporation if less than three years) (1) 80% or more of the controlled foreign corporation’s gross income was derived from a U.S. territory, and (2) 75% or more of the controlled foreign corporation’s gross income was effectively connected to the active conduct of a trade or business within a U.S. territory.
Written by the nonpartisan Congressional Research Service. All summary versions on Congress.gov
About this bill and sources
Official title: Territorial Economic Recovery Act
Latest action (Jan 13, 2025): Referred to the House Committee on Ways and Means.
Policy area: Taxation · Origin: House · Introduced: Jan 13, 2025
Official page on Congress.gov · Bill text (GovInfo) · Status record (XML)
No recorded floor vote found.