Bill > HR363

This bill amends the Internal Revenue Code to provide tax benefits for certain corporations operating in U.S. territories, specifically focusing on controlled foreign corporations (CFCs) in Puerto Rico, the Virgin Islands, and other specified U.S. possessions. The bill introduces a new provision that excludes certain income of "qualified possession corporations" from tested income calculations. To be considered a qualified possession corporation, a company must meet two key criteria: first, at least 80% of its gross income must be derived from sources within a U.S. possession, and second, at least 75% of its gross income must be effectively connected with an active trade or business within a U.S. possession during a three-year period. The amendments will apply to taxable years of foreign corporations beginning after December 31, 2023, and will impact the tax calculations of both the foreign corporations and their U.S. shareholders. This legislation aims to support economic activity and provide tax incentives for businesses operating in U.S. territories, potentially encouraging economic development in these regions.

Budget and Finance

https://www.congress.gov/bill/119th-congress/house-bill/363/all-info