Amends the Internal Revenue Code to deny preferential tax rates (5 to 15%) for dividends paid by a foreign corporation if: (1) such dividends are allowed as a tax deduction or credit under the tax laws of the country in which such foreign corporation is established; (2) such foreign corporation is not treated as a corporation, is exempt from taxation, or is a passive foreign investment company under the laws of its foreign country; or (3) such dividends are paid with respect to an instrument which is not treated as stock under the tax laws of the foreign country from which such dividends are paid.
Revises the definition of "qualified foreign corporation" for purposes of qualifying dividends paid by such a corporation for preferential tax rates to require such corporations be created or organized in a foreign country that has a comprehensive tax system (as determined by the Secretary of the Treasury).