Treasury Secretary Scott Bessent has formally requested Congress to eliminate controversial Section 899 from President Donald Trump’s budget, which pertains to additional taxes on foreign companies and investors.
Call to Congress
Bessent announced the need to remove Section 899, which would have imposed additional taxes on companies and investors from other countries if those countries enforced strict tax policies under international agreements. He noted that this section no longer made sense as parts of the OECD’s Pillar 2 tax regime will no longer apply to U.S. companies.
Removal of Taxes Under Pillar 2
Pillar 2 was part of a deal made under former President Joe Biden, which mandated a 15% global minimum corporate tax rate. The U.S. has stated that these rules will no longer apply to American companies, making the tax enforcement unnecessary. Bessent stated that the agreement reached with G7 countries removes the need for such a retaliatory tax.
Response from the Financial Sector
The financial sector expressed opposition to the proposed tax. Major banks and investors warned that it would decrease corporate investment and lead to a capital outflow from the U.S. One of the most vocal critics was Jonathan Samford, CEO of the Global Business Alliance, who remarked, 'This is what leadership looks like — choosing economic strength over squandered opportunity.'
The discussion surrounding the proposed tax on foreign companies has gained momentum following Bessent's appeal to Congress. The upcoming budget package, which also includes an extension of tax cuts for individuals, may significantly impact the economic climate in the country.
