II
110th CONGRESS
1st Session
S. 396
IN THE SENATE OF THE UNITED STATES
January 25, 2007
Mr. Dorgan (for himself, Mr. Levin, and Mr. Feingold) 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 treat controlled foreign corporations established in tax havens as domestic corporations.
Tax treatment of controlled foreign corporations established in tax havens
In general
Subchapter C of chapter 80 of the Internal Revenue Code of 1986 (relating to provisions affecting more than one subtitle) is amended by adding at the end the following new section:
Controlled foreign corporations in tax havens treated as domestic corporations
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.
Tax-Haven CFC
For purposes of this section—
In general
The term tax-haven CFC means, with respect to any taxable year, a foreign corporation which—
was created or organized under the laws of a tax-haven country, and
is a controlled foreign corporation (determined without regard to this section) for an uninterrupted period of 30 days or more during the taxable year.
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.
Tax-Haven country
For purposes of this section—
In general
The term tax-haven country means any of the following:
| Andorra | Guernsey | Panama |
| Anguilla | Isle of Man | Samoa |
| Antigua and Barbuda | Jersey | San Marino |
| Aruba | Liberia | Federation of |
| Commonwealth of the | Principality of | Saint Christ- |
| Bahamas | Liechtenstein | opher |
| Bahrain | Republic of the | and Nevis |
| Barbados | Maldives | Saint Lucia |
| Belize | Malta | Saint Vincent |
| Bermuda | Republic of the | and the |
| British Virgin Islands | Marshall Islands | Grenadines |
| Cayman Islands | Mauritius | Republic of the |
| Cook Islands | Principality of Monaco | Seychelles |
| Cyprus | Montserrat | Tonga |
| Commonwealth of the | Republic of Nauru | Turks and Caicos |
| Dominica | Netherlands | Republic of |
| Gibraltar | Antilles | Vanuatu |
| Grenada | Niue |
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.
.
Conforming amendment
The table of sections for subchapter C of chapter 80 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:
Sec. 7875. Controlled foreign corporations in tax havens treated as domestic corporations.
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Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2008.