The Unfair Tax Prevention Act modifies how the base erosion and anti-abuse tax (BEAT) applies to certain foreign-owned businesses that are subject to "extraterritorial taxes" imposed by other countries. Extraterritorial taxes are taxes that foreign countries impose on corporations based on income earned by connected entities elsewhere, rather than just the corporation's direct operations. The bill creates special rules so that these foreign-owned entities face stricter BEAT requirements, including treating half of their cost of goods sold as a taxable deduction reduction and removing certain exemptions that would otherwise apply. The legislation applies to taxable years beginning after it becomes law and was introduced by a bipartisan group of House representatives in March 2025. The intent appears to be protecting U.S. tax revenue by preventing companies with foreign ownership from using certain tax benefits to reduce their U.S. tax obligations when they're already paying extraterritorial taxes abroad.
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