This legislative proposal, known as the "No Tax Breaks for Outsourcing Act," aims to overhaul several key aspects of the U.S. international tax system. Its primary goal is to ensure that income earned by controlled foreign corporations (CFCs) is taxed more comprehensively and to discourage the shifting of profits and operations abroad. The bill introduces significant changes to how foreign income is calculated and how foreign tax credits are applied. A central provision of the bill mandates the current year inclusion of all net CFC tested income , effectively repealing the previous tax-free deemed return on investments and the deduction for global intangible low-taxed income (GILTI). This change means that U.S. shareholders will be taxed on a broader base of their foreign subsidiaries' income. Furthermore, the bill requires a country-by-country application for calculating net CFC tested income, preventing companies from blending high-tax and low-tax foreign earnings to reduce their overall U.S. tax liability. The legislation also makes substantial modifications to the foreign tax credit system. It eliminates the "80 percent of" limitation on the deemed paid foreign tax credit for tested income, allowing a full credit for foreign taxes paid. However, it also eliminates the carryback of foreign tax credits , permitting only a 10-year carryforward. A major reform is the introduction of a country-by-country application of the foreign tax credit limitation based on taxable units , meaning the credit limitation will be calculated separately for each country and for specific entities like foreign corporations, pass-through entities, and branches. To address profit shifting through interest deductions, the bill imposes a limitation on the deduction of interest by domestic corporations that are members of international financial reporting groups. This new rule restricts the amount of interest expense a U.S. company can deduct based on its share of the group's global net interest expense and earnings before interest, taxes, depreciation, and amortization (EBITDA). Any disallowed interest can be carried forward for up to five years. The bill also strengthens anti-inversion rules, making it more difficult for U.S. companies to reincorporate abroad to reduce their tax burden. It expands the definition of an "inverted domestic corporation" to include foreign corporations where more than 50% of the stock is held by former U.S. shareholders or where management and control are primarily in the U.S. with significant domestic business activities. Finally, the legislation introduces a new rule to treat certain foreign corporations as domestic for income tax purposes if their management and control occur primarily within the United States , particularly for publicly traded companies or those with substantial assets.