[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 3486 Introduced in Senate (IS)]
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118th CONGRESS
1st Session
S. 3486
To amend the Internal Revenue Code of 1986 to disallow companies
associated with foreign adversaries from receiving the advanced
manufacturing production credit.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
December 13, 2023
Mr. Rubio 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 disallow companies
associated with foreign adversaries from receiving the advanced
manufacturing production credit.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Protecting American Advanced
Manufacturing Act''.
SEC. 2. PROHIBITION ON ALLOWANCE OF ADVANCED MANUFACTURING PRODUCTION
CREDIT FOR ELIGIBLE COMPONENTS PRODUCED BY COMPANIES
ASSOCIATED WITH FOREIGN ADVERSARIES.
(a) In General.--Section 45X of the Internal Revenue Code of 1986
is amended by adding at the end the following new subsection:
``(e) Prohibition on Allowance of Credit for Eligible Components
Produced by Companies Associated With Foreign Adversaries.--
``(1) In general.--No credit shall be allowed under
subsection (a) with respect to any eligible component which is
produced by a disqualified entity.
``(2) Disqualified entity.--
``(A) In general.--For purposes of this subsection,
the term `disqualified entity' means any entity
described in subparagraphs (B) through (D).
``(B) Foreign adversary parties.--The entities
described in this subparagraph consist of the
following:
``(i) The government of a foreign
adversary, any agency or government
instrumentality of a foreign adversary, or any
entity which is directly or indirectly owned,
controlled, or directed by any such government,
agency, or government instrumentality.
``(ii) Any entity organized under the laws
of a foreign adversary (or any political
subdivision thereof) or whose headquarters is
located within a foreign adversary.
``(C) Owned, controlled, directed, or influenced by
foreign adversary parties.--The entities described in
this subparagraph consist of the following:
``(i) Any entity for which, on any date
during the taxable year, not less than 10
percent of the outstanding equity interests (by
value, voting, governance, board appointment,
or similar rights or influence) are held
directly or indirectly by, or on behalf of, 1
or more of the entities described in
subparagraph (B), including through interests
in co-investment vehicles, joint ventures, or
similar arrangements.
``(ii) Any entity which is directly or
indirectly controlled, directed, or materially
influenced by any entity described in
subparagraph (B).
``(iii) Any entity for which the actions,
management, ownership, or operations of such
entity are subject to the direct influence of
an entity described in subparagraph (B).
``(iv) Any entity for which an interest in
such entity is held by an entity described in
subparagraph (B) (referred to in this clause as
the `beneficiary firm') as a derivative
financial instrument or through a contractual
arrangement between the beneficiary firm and
such entity, including any financial instrument
or other contract between the beneficiary firm
and the entity which seeks to replicate any
financial return with respect to such entity or
interest in such entity.
``(D) Debt or other arrangements with foreign
adversary parties.--
``(i) In general.--An entity is described
in this subparagraph if, as a result of any
prohibited obligation or arrangement--
``(I) the actions, management, or
operations of such entity are subject
to the direct or indirect influence of
1 or more entities described in
subparagraph (B) or (C), or
``(II) such entity provides a
substantial benefit to 1 or more
entities described in subparagraph (B)
or (C).
``(ii) Prohibited obligation or
arrangement.--For purposes of this
subparagraph, the term `prohibited obligation
or arrangement' means any--
``(I) debt,
``(II) lease or sublease
arrangement,
``(III) management or operating
arrangement,
``(IV) contract manufacturing
arrangement,
``(V) license or sublicense
agreement, or
``(VI) financial derivative.
``(iii) Exception.--For purposes of clause
(i)(II), the purchase of equipment or
manufacturing inputs in an arm's-length
transaction shall not, in and of itself, be
deemed to provide a substantial benefit.
``(E) Other definitions.--For purposes of this
paragraph--
``(i) Control.--The term `control' has the
meaning given in section 800.208 of title 31,
Code of Federal Regulations (as in effect on
the date of enactment of the Protecting
American Advanced Manufacturing Act).
``(ii) Foreign adversary.--The term
`foreign adversary' has the meaning given the
term `covered nation' in section 4872(d)(2) of
title 10, United States Code.
``(3) Administration.--The Secretary may issue such
guidance as is necessary to carry out the purposes of this
subsection, including establishment of rules for--
``(A) implementation of paragraph (2)(C)(i) for
determination of whether the percentage requirements
with respect to outstanding equity interests have been
satisfied in the case of an entity for which the stock
of such entity is traded on an established securities
market in the United States or any foreign country, and
``(B) preventing entities from evading,
circumventing, or abusing the application of the
requirements under this subsection.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of enactment of this Act.
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