US Treasury Urges Congress to Remove Retaliatory Tax Measure in Trump Budget Bill

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The Treasury has asked Congress to remove a provision in Donald Trump’s budget bill that allows the US government to raise taxes on foreign investments from select countries. Treasury secretary Scott Bessent announced that parts of the OECD’s global minimum tax regime would no longer apply to US companies, making the retaliatory measure in Trump’s budget bill unnecessary.

Bessent requested lawmakers to eliminate Section 899 in Trump’s bill, which would have enabled the US government to impose additional taxes on companies and investors from countries with punitive tax policies. Some banks and investors expressed concerns that Section 899 could lead to a decrease in corporate investment and a withdrawal from US assets.

The US has reportedly come to an agreement with other G7 nations regarding the OECD Pillar 2 taxes. Bessent stated that US companies will not be subject to OECD Pillar 2 taxes and that they will collaborate to implement this agreement across the OECD-G20 Inclusive Framework in the near future.

Pillar 2 of the new OECD regime enforces a global minimum 15% corporate tax rate and allows other countries to collect the minimum tax if companies’ home countries do not. The regime has begun to take effect this year.

According to the source: Financial Times.