On June 16, 2025, Republican members of the Senate Finance Committee released their version of the “One Big Beautiful Bill” (OBBB), following the passage of the House version in May 2025. The proposal seeks to advance key corporate and international tax provisions, with the goal of presenting the bill to the President by July 4, 2025.

Outlined below are the notable provisions proposed in the Senate version:

Key Provisions:

1. Excise Tax on Certain Remittance Transfers
2. U.S. Business Tax Reforms
   • Full expensing of domestic research and experimental (R&E) expenditures
   • Modification of the business interest deduction limitation (EBITDA-based)
   • Enhanced expensing and depreciation incentives
3. International Tax Reforms
   • Modifications to Section 250 (deduction eligibility and intangible income)
   • Changes to the Foreign Tax Credit (FTC) regime
   • Updates to the Base Erosion and Anti-Abuse Tax (BEAT)
4. Measures Addressing Unfair Foreign Taxes

1. Excise Tax on Remittance Transfers

• Collection Mechanism:

Transfer service providers are required to:

• • Collect the tax at the time of the transaction
  • Remit collected amounts quarterly to the U.S. Treasury
  • Bear secondary liability if the tax is not collected from the sender

• Exemptions:

The excise tax would not apply to transfers that are:

• • Withdrawn from accounts at U.S. financial institutions compliant with the Bank Secrecy Act
  • Funded via U.S.-issued debit or credit cards

• Refundable Credit:

Individuals with valid, work-eligible Social Security Numbers (SSNs) may claim a refundable tax credit against this excise tax.

• Effective Date:

Applicable to transfers made on or after January 1, 2026.

2. U.S. Business Tax Reforms

Full Expensing of Domestic Research and Experimental (R&E) Expenditures

• Additional Provisions:

  • Retroactive Relief: Small businesses with average annual gross receipts of $31 million or less may apply the new rule retroactively for tax years beginning after December 31, 2021.
  • Acceleration Election: Taxpayers may elect to accelerate remaining amortized deductions for domestic R&E expenditures made between 2022–2024 over a 1-year or 2-year period.

• Effective Date:

Applies to domestic R&E expenses in taxable years beginning after December 31, 2024. Retroactive and acceleration provisions apply to relevant prior years.

Advanced Manufacturing Investment Credit

• Proposed Change:

The credit rate for qualified investments in advanced manufacturing of semiconductor is increased from 25% to 30%, applicable to property placed in service after December 31, 2025.

Enhanced Expensing and Depreciation Incentives for Business Assets

• Full Expensing for Certain Business Property

The proposal reinstates 100% bonus depreciation for qualified property acquired and placed in service on or after January 19, 2025. It also applies to specified plants planted or grafted on or after the same date.

• Section 179 Expensing Limitations

The maximum expensing cap is increased to $2.5 million, with phase-out beginning at $4 million. Both thresholds will be adjusted for inflation starting in 2026.

• Special Depreciation for Qualified Production Property

A 100% first-year depreciation is introduced for “qualified production property,” which includes certain non-residential real estate used in manufacturing or refining. The property must be new, placed in service in the U.S., and used in activities resulting in substantial transformation of tangible personal property.

A “qualified production activity” generally means the manufacturing, production, or refining of tangible personal property. An activity generally does not count as a qualified production activity unless it results in a substantial transformation of the property comprising a product.

Modification of Limitation on Business Interest

Definition of Adjusted Taxable Income (ATI) for Business Interest Limitation

Coordination of Business Interest Limitation with Interest Capitalization Provisions

3. International Tax Reforms

Modifications to Section 250

Foreign Tax Credit (FTC) Reforms

Key Changes:

• Limits allowable deductions for GILTI to those directly related to that income.
• Increases the deemed paid foreign tax credit from 80% to 90%.
• Allows certain U.S.-produced inventory income to be treated as foreign-source for FTC limitation purposes if conditions related to foreign business presence are met.

Base Erosion and Anti-Abuse Tax (BEAT)

• Proposed Change:

  • Raises BEAT rate to 14%.
  • Removes the limitation on credits against BEAT liability.
  • Excludes payments subject to high foreign tax rates of at least 18.9% from being treated as base erosion payments.
  • Lowers the base erosion threshold from 3% to 2% for all taxpayers.
  • Expands base erosion payments to include certain capitalized interest.

Other International Tax Reforms

Notable Proposals:

• Makes the CFC look-through rule under Section 954(c)(6) permanent.
• Repeals the one-month deferral election for foreign corporations.
• Reinstates Section 958(b)(4) to limit downward attribution of stock ownership.
• Revises pro rata share rules for Subpart F and GILTI inclusions to consider partial-year ownership.

4. Remedies Against Unfair Foreign Taxes

1. Increased U.S. Tax Rates on “Applicable Persons”:

   • Applies incremental tax rate increases (up to 15%) on income, withholding, and excise taxes.
   • Targets foreign governments, residents of the offending country, and their related entities.
   • Rates increase by 5 percentage points annually, capped at a total of 15%.

2. Modified BEAT Provisions for U.S. Entities Owned by Offending Country Residents:

• • Removes the gross receipts threshold.
  • Reduces the base erosion threshold from 2% to 0.5%.
  • Expands modified taxable income to include certain payments and capitalized costs.

• Effective Date & Transition Rules:

  • Provisions take effect for tax years beginning after December 31, 2026.
  • Require a one-year delay post-enactment and a 180-day period from enactment of the triggering foreign tax.