S.Amdt. 2365

1. Adds SEC. __. TAX TREATMENT OF CONTROLLED FOREIGN CORPORATIONS ESTABLISHED IN TAX HAVENS wherever appropriate

   Adds a section

   Inserted: SEC. __. TAX TREATMENT OF CONTROLLED FOREIGN CORPORATIONS ESTABLISHED IN TAX HAVENS.

   Inserted: (a) In General.--Subchapter C of chapter 80 (relating to provisions affecting more than one subtitle), as amended by this Act, is amended by adding at the end the following new section:

   Inserted: "SEC. __. 7875. CONTROLLED FOREIGN CORPORATIONS IN TAX HAVENS TREATED AS DOMESTIC CORPORATIONS.

   Inserted: "(a) General Rule.--If a controlled foreign corporation is a tax-haven CFC, then, notwithstanding section 7701(a)(4), such corporation shall be treated for purposes of this title as a domestic corporation.

   Inserted: "(b) Tax-Haven CFC.--For purposes of this section--

   Inserted: "(1) In general.--The term 'tax-haven CFC' means, with respect to any taxable year, a foreign corporation which--

   Inserted: "(A) was created or organized under the laws of a tax-haven country, and

   Inserted: "(B) is a controlled foreign corporation (determined without regard to this section) for an uninterrupted period of 30 days or more during the taxable year.

   Inserted: "(2) Exception.--The term 'tax-haven CFC' does not include a foreign corporation for any taxable year if substantially all of its income for the taxable year is derived from the active conduct of trades or businesses within the country under the laws of which the corporation was created or organized.

   Inserted: "(c) Tax-Haven Country.--For purposes of this section--

   Inserted: "(1) In general.--The term 'tax-haven country' means any of the following:

   Inserted: Andorra Gibraltar Netherlands Antilles Anguilla Grenada Niue Antigua and Barbuda Guernsey Panama Aruba Isle of Man Samoa Commonwealth of the Jersey San Marino Bahamas Bahrain Liberia Federation of Saint Christopher and Nevis Barbados Principality of Saint Lucia Liechtenstein Belize Republic of the Saint Vincent Maldives and the Grenadines Bermuda Malta Republic of the Seychelles British Virgin Islands Republic of the Tonga Marshall Islands Cayman Islands Mauritius Turks and Caicos Cook Islands Principality of Monaco Republic of Vanuatu Cyprus Montserrat Commonwealth of the Republic of Nauru Dominica

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   Inserted: "(2) Secretarial authority.--The Secretary may remove or add a foreign jurisdiction from the list of tax-haven countries under paragraph (1) if the Secretary determines such removal or addition is consistent with the purposes of this section."

   Inserted: (b) Conforming Amendment.--The table of sections for subchapter C of chapter 80 is amended by adding at the end the following new item:

   Inserted: "Sec 7875. Controlled foreign corporations in tax havens treated as domestic corporations.".

   Inserted: (c) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 2005.

   The amendment doesn't say where this goes; the clerk decides.

   Original wording

   At the appropriate place, insert:

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As printed