Unfair Tax Prevention Act

Modification of tax treatment for specific entities: The bill changes how a "foreign-owned extraterritorial tax regime entity" is treated for the purposes of determining if it is an applicable taxpayer (Section 2(a)(1)(A)).

Changes to base erosion tax benefit treatment: Under this Act, 50 percent of the entity's cost of goods sold will be treated as a base erosion tax benefit with respect to a base erosion payment (Section 2(a)(1)(D)).

New tax classifications: The bill creates a specific classification for a "foreign-owned extraterritorial tax regime entity," which applies to any taxpayer controlled by a foreign entity if an extraterritorial tax is imposed on certain related foreign entities (Section 2(a)(2)(A)).

Broad definition of extraterritorial tax: The term "extraterritorial tax" is defined broadly to include any tax imposed by a foreign country based on income or profits linked through a chain of ownership, which can include increases in tax rates, bases, or the denial of deductions and credits (Section 2(a)(2)(B)(i)-(ii)).