S 1605119th CongressIn Committee

International Competition for American Jobs Act

Introduced: May 6, 2025

Standard Summary

Comprehensive overview in 1-2 paragraphs

The International Competition for American Jobs Act is a broad, multi-section proposal that would overhaul how the United States taxes multinational corporations and their foreign operations. The bill seeks to tighten and path-change several core international tax regimes (including GILTI, FDII, BEAT, Subpart F, and foreign tax credits) and to expand how foreign income is taxed when earned by U.S. shareholders. Key moves include making certain look-through rules for controlled foreign corporations permanent, reshaping the FDII/GILTI deduction structure, sweeping changes to the Base Erosion and Anti-Abuse Tax (BEAT) and foreign tax credits, and significant adjustments to Subpart F (including repealing core elements and creating new regimes for certain foreign-controlled U.S. shareholders). The package also introduces new rules around the transfer of intangible property from foreign subsidiaries to U.S. shareholders, and expands the treatment of Virgin Islands income for GILTI purposes. Many provisions would apply to taxable years beginning after December 31, 2025. Overall, the bill appears aimed at reducing incentives to shift profits overseas, broadening the U.S. tax base, and altering the relative tax treatment of foreign-derived income and foreign tax credits to tighten the international tax system. It would raise compliance complexity and potentially change the after-tax profitability of many multinational corporate structures.

Key Points

1Permanent extension of the look-thru rule for controlled foreign corporations (CFCs) (Sec. 2)
2- Removes the sunset date and makes the rule permanent for taxable years after 2025.
3- Applies to taxable years of foreign corporations beginning after 2025 and to U.S. shareholders’ years in which those foreign years end.
4Major reforms to the FDII and GILTI framework (Sec. 3)
5- The deduction under Section 250 is redesigned: for domestic corporations, the deduction equals 37.5% of foreign-derived intangible income (FDII) plus 50% of (a) global intangible low-taxed income (GILTI) included in gross income and (b) the portion of a dividend taxed under section 78 attributable to that GILTI.
6- The deduction would be titled “foreign-derived deduction eligible income” (FDEE) and certain related provisions and thresholds are reorganized.
7- Look-through for interest payments changes and related rules; applies to years after 2025.
8Overhaul of BEAT and related credits (Sec. 4)
9- BEAT base amount would be determined using regular tax liability (not adjusted credits), and credits would be treated differently.
10- Credits toward other tax credits (like the general business credit) would be preserved with revised treatment.
11- Repeals certain post-2025 modifications and adds new rules for determining base erosion payments, including an 18.9% foreign tax-rate threshold and regulatory guidance to prevent avoidance.
12- Applies to taxable years beginning after 2025.
13Restructuring of foreign tax credit limits and allocation (Sec. 5)
14- Reconfigures the foreign tax credit limitation baskets and how deductions (including those related to 250) are allocated to foreign-source income, with new interaction rules involving GILTI and foreign tax credits.
15- Adds a new allocation rule tying certain deductions to foreign-source GILTI income and requires reallocation of deductions to U.S.-source income in some cases.
16Strengthened and expanded Subpart F concepts (Secs. 6-7, 11, 12)
17- Restores tighter downward attribution limits for constructive ownership rules and introduces new provisions to treat foreign-controlled U.S. shareholders and foreign-controlled foreign corporations for Subpart F purposes (951B), expanding when and how foreign income is included in U.S. tax.
18- Carries forward and carryover mechanics for net CFC-tested losses (951A(c)(3)) and adjusts Section 382 rules to accommodate this.
19- Repeals or restructures key Subpart F elements related to foreign base company income and foreign base company services income; also reduces or eliminates certain Subpart F inclusions (with effective dates after 2025).
20- Exempts certain investments in U.S. property from Subpart F (956) for corporate groups ending after 2025.
21New transfer rules for intangible property (Sec. 14)
22- Creates a new section (966) on transfers of intangible property from CFCs to U.S. shareholders, with adjustments to basis and treatment of non-dividend distributions in distributions of pre-enactment intangible property.
23- Impacts how cross-border transfers of IP are taxed and the basis in stock and assets for U.S. shareholders.
24Virgin Islands services income and GILTI (Sec. 15)
25- Expands GILTI to include qualified Virgin Islands services income for certain specified U.S. shareholders, effectively tightening how VI-based services income is taxed under GILTI.
26Repeal of the 80% foreign tax credit haircut for GILTI (Sec. 9)
27- Removes the 80% haircut that previously limited the foreign tax credit related to GILTI, broadening the use of foreign tax credits.
28Other modifications and clarifications (Secs. 8, 13)
29- Changes to the timing for claiming credits or deductions, adjustments to statute of limitations rules for related changes in taxes, and clarifications on what counts as a foreign income tax for credit purposes.
30- Aligns the definition of foreign taxes with income tax characteristics for purposes of the foreign tax credit.

Impact Areas

Primary: U.S. domestic corporations with foreign subsidiaries and U.S. shareholders of foreign corporations- Effects on overall tax rate and after-tax profitability of multinational operations- Changes to the incentives for offshore structuring, IP transfers, and intercompany transactions- Potential shift in where profits are earned or reported due to revised GILTI/FDII dynamics and Subpart F changesSecondary: Tax planning professionals, in-house tax teams, and financial statement impact- Increased complexity and need for new modeling to understand the net tax cost under the revised regime- Greater regulatory and compliance obligations, including potential new reporting requirements and regulationsAdditional/Broader impacts- Treasury revenue implications depending on how provisions interact with global tax planning- Possible changes in cross-border investment decisions and corporate structuring- Interplay with international tax regimes and potential responses from other countriesCFC: Controlled Foreign Corporation, a foreign corporation more than 50% owned by U.S. shareholders.GILTI: Global Intangible Low-Taxed Income, a U.S. minimum tax on certain foreign earnings of CFCs.FDII: Foreign-Derived Deduction Income, originally a deduction designed to incentivize exporting activities by U.S. corporations.BEAT: Base Erosion and Anti-Abuse Tax, a minimum tax on large U.S. multinational groups to deter shifting profits offshore.Subpart F: A set of rules designed to tax certain types of passive or easily movable income of CFCs currently in the U.S. even if not repatriated.951A: The GILTI regime, with specific mechanics for U.S. shareholders of CFCs.245A: Dividends received deduction for certain foreign-source income; the bill reconfigures interplay with foreign-source deductions.956: Provisions relating to investments in U.S. property by foreign corporations (and Subpart F treatment).

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