US Treasury asks Congress to scrap retaliatory tax measure in Trump budget bill

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The Treasury has asked Congress to scrap a provision in Donald Trump’s flagship budget bill that allows the US government to raise taxes on foreign investments from select countries, reversing a plan that Wall Street warned could roil markets.

Treasury secretary Scott Bessent said on Thursday that parts of the OECD’s global minimum tax regime would no longer apply to US companies. As a result, the retaliatory measure in the US president’s “big, beautiful” budget bill was no longer needed.

Bessent said on social media site X that his agency had asked lawmakers in the House of Representatives and the Senate to remove the Section 899 provision in Trumps’ bill. Section 899 would have allowed the US government to impose extra taxes on companies and investors from countries that it deemed to have punitive tax policies such as those allowed under the OECD regime.

Some banks and investors had argued Section 899 could cause a decline in corporate investment and a retreat from US assets.

Bessent said the US had reached an “understanding” with other members of the G7 group of leading nations, which dominate the OECD.

“OECD Pillar 2 taxes will not apply to US companies, and we will work cooperatively to implement this agreement across the OECD-G20 Inclusive Framework in coming weeks and months,” he wrote.

Pillar 2 of the new OECD regime introduces a global minimum 15 per cent corporate tax rate with measures allowing other countries to collect the minimum tax if companies’ home countries do not. The regime started to take effect this year.

This is a developing story