By Richard Cowan

WASHINGTON (Reuters) - The head of a key House of Representatives panel intends to unveil a "discussion draft" aimed at transforming the corporate tax code to a territorial system, under which companies pay little or no taxes on overseas profits.

House Ways and Means Committee Chairman Dave Camp "has said that he hopes to soon have a discussion draft for a move to a territorial" tax system, Sage Eastman, spokesman for the powerful House Republican, said on Thursday.

While Eastman gave no details on what would be in the draft proposal, a territorial system of taxation would let U.S. multinationals pay little or no corporate income tax on their overseas profits, matching many other countries' systems.

Many large U.S. multinationals support the idea, though small and mid-sized companies without extensive foreign operations are generally cooler to the territorial proposal.

Under current law, many U.S. corporations put off paying a 35 percent tax on overseas profits by keeping that money offshore. Many others bring the money home and pay the tax.

But an estimated $1.5 trillion has been socked away overseas by U.S. companies hoping for a reform of the U.S. tax code, or a "holiday" that would let them, on a one-time basis, repatriate the overseas profits at a reduced tax rate.

Companies have been lobbying hard for separate legislation to allow such a repatriation tax holiday. Its fate may have been hurt by recent studies finding that an early "holiday" failed to create new U.S. jobs, as had been promised.

Asked if a repatriation holiday might be part of the larger draft Camp is preparing, Eastman noted that the chairman of the tax-writing committee has "previously said he would like to permanently solve the repatriation issue in tax reform."

Eastman declined to comment on when Camp would like to move forward in his committee with actual legislation.

A discussion draft normally is a vehicle for generating ideas in Congress and in the lobbying community on a large, complex legislative initiative.

For example, before Congress launched an intensive effort to reform the U.S. healthcare system, Senate Finance Committee Chairman Max Baucus, a Democrat, circulated a discussion draft on possible healthcare reform legislation.

Legislation ultimately was enacted in 2010.

A special deficit-reduction panel in Congress, known as the "super committee," has been mulling a possible cut in the 35 percent U.S. corporate tax rate. Such a measure could be coupled with ending some special interest tax breaks.

But the super committee is not expected to have enough time -- because of a November 23 deadline for finding at least $1.2 trillion in deficit reductions over 10 years -- to do a complete overhaul of the country's tax code.

(Editing by Kevin Drawbaugh)