H.R. 368 — Territorial Tax Parity and Fairness Act

This section expands the exclusions from U.S. shareholder status under section 957(c) of the Internal Revenue Code of 1986—persons whose stock ownership is not counted toward the more-than-50% threshold for controlled foreign corporation (CFC) status—to include bona fide residents of the Virgin Islands with respect to corporations organized under Virgin Islands law, provided a dividend received by such resident from the corporation would be treated as Virgin Islands–source income under section 934(b)(1). (Thus, such residents' ownership generally will not cause a Virgin Islands corporation to be classified as a CFC subject to U.S. anti-deferral rules such as Subpart F and GILTI.) The amendments apply to taxable years of foreign corporations beginning after December 31, 2024, and taxable years of individuals ending with or within such years.