Restrictions on tax-exempt entities' investments in Chinese companies.
This act introduces new rules for tax-exempt organizations, such as foundations or certain retirement plans. If these organizations invest in specific Chinese companies, they may lose their tax-exempt status. The goal is to limit capital flow to companies linked to the Chinese government or Communist Party, which could impact how these entities manage savings and investments.
Key points
Tax-exempt organizations (e.g., foundations, pension plans) will be prohibited from investing in designated "disqualified Chinese companies" to maintain their tax-exempt status.
The act defines "disqualified Chinese companies" to include those controlled by the Chinese government or Communist Party.
A waiver process is available for organizations to apply for permission to hold such investments, requiring justification and public disclosure.
Annual reporting on holdings in disqualified Chinese companies will be mandatory, even if a waiver is granted.
The Treasury Department will publish a list of pooled investments without exposure to disqualified Chinese companies and annual reports on U.S. outbound investment in China.
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