H.R. 2423 — Unfair Tax Prevention Act

This section establishes special rules under the base erosion and anti-abuse tax (BEAT)—which imposes a minimum tax on modified taxable income of certain large multinational corporations after reduction for base erosion payments to foreign affiliates—for foreign-owned extraterritorial tax regime entities (i.e., U.S. taxpayers controlled by a foreign entity, other than one controlled by a U.S. corporation, if an extraterritorial tax is imposed on specified related foreign entities or their trades or businesses). Specifically, it (1) treats such entities as applicable taxpayers meeting the gross receipts and base erosion percentage tests of Section 59A(e)(1)(B) and (C), (2) applies BEAT for taxable years beginning after the date of enactment (from after December 31, 2025) under subsection (b)(2), (3) disapplies exceptions in subsections (c)(2)(B), (c)(4)(B)(ii), and (d)(5), and (4) treats 50% of such entity's cost of goods sold as a base erosion tax benefit with respect to any base erosion payment. The amendments apply to taxable years beginning after the date of enactment.