HONOR Act

The "Hindering Oppressive Nations from Obtaining Revenue Act," or HONOR Act, proposes to amend the Internal Revenue Code of 1986 to deny any foreign tax credit or deduction for taxes paid or accrued to the Russian Federation. This measure is designed to prevent U.S. taxpayers from offsetting their domestic tax obligations with taxes paid to Russia, thereby increasing the financial cost of operating within that country. Specifically, the bill adds a new subparagraph to Section 901(j)(2) of the Code, making the denial applicable to the Russian Federation for a period commencing 30 days after the act's enactment. This period will conclude when the United States resumes normal trade relations with Russia, as determined by the Suspending Normal Trade Relations with Russia and Belarus Act. Furthermore, the bill explicitly states that these amendments will be applied without regard to any treaty obligation of the United States. The denial of deductions for such taxes will apply to taxes paid or accrued after 90 days following the act's enactment, while other provisions take effect immediately. This comprehensive approach aims to financially isolate the Russian Federation by eliminating tax benefits for U.S. entities operating there.