H.R. 591: Defending American Jobs and Investment Act

This bill, known as the Defending American Jobs and Investment Act, proposes measures aimed at addressing and enforcing rules against extraterritorial and discriminatory taxes imposed by foreign countries on U.S. entities and individuals. The key provisions of the bill include:

Reporting Requirements

The bill mandates that the U.S. Secretary of the Treasury must submit a report to Congress within 90 days of the bill's enactment, and subsequently every 180 days. This report will:

• List foreign countries that have any extraterritorial or discriminatory taxes.
• Include details about each of those taxes, such as their rates and effective dates.
• Notify Congress when a foreign country removes any extraterritorial or discriminatory tax.

Engagement with Foreign Countries

Upon identification of countries with discriminatory tax practices, the Secretary will engage in diplomatic discussions to:

• Express U.S. concerns regarding adverse trade effects caused by these taxes.
• Encourage the repeal of taxes that target U.S. entities.
• Inform countries of potential remedial actions the U.S. may take.

Remedial Actions

If a foreign country maintains these taxes despite U.S. efforts, the bill allows for several remedial actions, such as:

• Increased Tax Rates: The U.S. will increase tax rates on foreign individuals and corporations from those countries.
• Exemptions from Treaties: U.S. tax rates would be adjusted without regard to existing tax treaties with those countries.
• Withholding Taxes: Rates on payments to foreign entities could also be raised under specific conditions.

Procurement Restrictions

The bill grants the President the authority to prohibit the federal government from procuring goods or services from entities in countries imposing these taxes, effectively increasing economic pressure on those countries.

Trade Agreement Considerations

When negotiating trade agreements, the U.S. Trade Representative and Secretary of Commerce are required to consider the existence of these extraterritorial and discriminatory taxes and how they may affect negotiations.

Definitions of Relevant Taxes

The bill provides specific definitions for:

• Extraterritorial Tax: Taxes imposed based on income connected to a corporation without direct ownership links.
• Discriminatory Tax: Taxes that apply unfairly to non-resident individuals or foreign businesses, impacting their ability to compete.

Regulatory Authority

The Secretary of the Treasury is empowered to create regulations necessary to implement the provisions of this bill.

Relevant Companies

• AAPL - Apple Inc. may be affected as it operates globally and could face additional tax burdens in countries with discriminatory tax regimes.
• GOOGL - Alphabet Inc. could encounter challenges in countries imposing extraterritorial taxes that target its global operations.
• MSFT - Microsoft Corporation might see its international revenue impacted due to increased tax measures on foreign operations.