US Treasury Urges Congress to Eliminate Controversial Foreign Revenge Tax in Trump Proposal

The US Treasury has urged Congress to remove a provision from Donald Trump’s budget bill that could let Washington raise taxes on foreign investments. Treasury Secretary Scott Bessent announced that this change is unnecessary now that concessions have been secured for US companies under the OECD’s global minimum tax rules.

Bessent shared this update on social media, stating that the Treasury wants lawmakers to eliminate the controversial Section 899 from Trump’s budget bill, which has already passed the House and is now in the Senate. A vote could happen soon.

If allowed to go through, Section 899 would have enabled the US to impose taxes on companies from countries with unfavorable tax policies. Some financial institutions expressed concern that this could deter foreign investments in US markets.

UK Chancellor Rachel Reeves called the Treasury’s decision “important,” emphasizing that it provides stability for businesses. Bessent pointed out that the US has reached an agreement with the G7 nations, which also participate in the OECD, making Section 899 redundant.

The OECD’s new tax regime aims to prevent tax avoidance by multinational corporations. It introduces a minimum corporate tax rate of 15% and allows countries to collect taxes even if companies’ home countries do not. This plan is expected to save American taxpayers over $100 billion, according to estimates from the Treasury.

This global minimum tax agreement is the product of a significant international collaboration involving over 135 countries, established in 2021 to modernize the outdated international tax system. The first part of this agreement, which seeks to close tax loopholes particularly for large tech companies, has yet to be enacted.

Historically, the US approach to global tax cooperation has fluctuated. While the Biden administration has lent support to the OECD agreement, the previous Trump administration was largely opposed. Recently, surveys show that American businesses are more open to international tax reforms, reflecting a shift in attitude toward cooperation on this issue.

As the public discourse evolves, social media reactions reveal a mix of support and skepticism toward these tax changes. Many businesses welcome the stability, while some critics argue that further scrutiny is necessary to ensure fair practices.

For ongoing updates and insights into international tax policies, you can refer to resources like the OECD’s official site here.

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