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TITLE 26-INTERNAL REVENUE CODE some taxes, on any item of income received by such citizens or corporations from sources within such foreign country, than taxes im- posed by the provisions of this subtitle on similar income derived from sources within the United States by residents or corpora- tions of such foreign country, (2) such foreign country, when requested by the United States to do so, has not acted to revise or reduce such taxes so that they are no more burdensome than taxes imposed by the provisions of this subtitle on similar income derived from sources within the United States by residents or corporations of such foreign country, and (3) it is in the public interest to apply pre- 1967 tax provisions in accordance with the provisions of this subsection to residents or corporations of such foreign country, the President shall proclaim that the tax on such similar income derived from sources within the United States by residents or corpo- rations of such foreign country shall, for tax- able years beginning after such proclamation, be determined under this subtitle without regard to amendments made to this subchapter and chapter 3 on or after the date of enactment of this section. (b) Imposition of discriminatory taxes by foreign country Whenever the President finds that- ()- under the laws of any foreign country, citizens of the United States or domestic cor- porations (or any class of such citizens or cor- porations) are, with respect to any item of income, being subjected to a higher effective rate of tax than are nationals, residents, or corporations of such foreign country (or a similar class of such nationals, residents, or corporations) under similar circumstances; (2) such foreign country, when requested by the United States to do so, has not acted to eliminate such higher effective rate of tax; and (3) it is in the public interest to adjust, in accordance with the provisions of this subsec- tion, the effective rate of tax imposed by this subtitle on similar income of nationals, resi- dents, or corporations of such foreign country (or such similar class of such nationals, resi- dents, or corporations), the President shall proclaim that the tax on similar income of nationals, residents, or corpo- rations of such foreign country (or such similar class of such nationals, residents, or corpora- tions) shall, for taxable years beginning after such proclamation, be adjusted so as to cause the effective rate of tax imposed by this subti- tle on such similar income to be substantially equal to the effective rate of tax imposed by such foreign country on such item of income of citizens of the United States or domestic corpo- rations (or such class of citizens or corpora- tions). In implementing a proclamation made under this subsection, the effective rate of tax imposed by this subtitle on an item of income may be adjusted by the disallowance, in whole or in part, of any deduction, credit, or exemp- tion which would otherwise be allowed with re- spect to that item of income or by increasing the rate of tax otherwise applicable to that item of income. (c) Alleviation of more burdensome or discriminatory taxes Whenever the Pregident finds that- (1) the laws of any foreign country with re- spect to which the President has made a proc- lamation under subsection (a) have been modified so that citizens of the United States not residents of such foreign country or do. mestic corporations are no longer subject to more burdensome taxes on the item of income derived by such citizens or corpora- tions from sources within such foreign coun- try, or (2) the laws of any foreign country with re- spect to which the President has made a proc- lamation under subsection (b) have been modified so that citizens of the United States or domestic corporations (or any class of such citizens or corporations) are no longer subject to a higher effective rate of tax on the item of income, he shall proclaim that the tax imposed by this subtitle on the similar income of nationals, resi- dents, or corporations of such foreign country shall, for any taxable year beginning after such proclamation, be determined under this subtitle without regard to such subsection. (d) Notification of Congress required No proclamation shall be issued by the Presi- dent pursuant to this section unless, at least 30 days prior to such proclamation, he has noti- fied the Senate and the House of Representa- tives of his intention to issue such proclama- tion. (e) Implementation by regulations The Secretary shall prescribe such regula- tions as he deems necessary or appropriate to implement this section. (Added Pub. L. 89-809, title I, § 105(b), Nov. 13, 1966, 80 Stat. 1563, and amended Pub. L. 94- 455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.) REFERENCES IN TEXT The date of enactment of this section, referred to in the provisions following subsec. (a)(3), is the date of enactment of Pub. L. 89-809, which was approved Nov. 13, 1966. AMENDMENTS 1976-Subsec. (e). Pub. L. 94-455 struck out "or his delegate" following "Secretary". EFFECTIVE DATE Section applicable with respect to taxable years be- ginning after Dec. 31, 1966, see section 105(d) of Pub. L. 89-809, set out as an Effective Date of 1966 Amend- ment note under section 894 of this title. PART III-INCOME FROM SOURCES WITHOUT THE UNITED STATES Subpart A. Foreign tax credit. B. Earned income of citizens of United States. C. Western Hemisphere trade corporations. D. Possessions of tht United States. E. China Trade Act corporations. F. Controlled foreign corporations. [G. Repealed.] § 896 Page 574