In an announcement that had been anticipated for the past few days and will be welcomed by many industry stakeholders, U.S. Treasury Secretary Scott Bessent said late on June 26, 2025, that he has asked leaders in the U.S. House of Representatives and Senate to remove Section 899 protective measures included in the One Big Beautiful Bill (OBBB) after an agreement was reached with U.S. allies and fellow G7 members:
Based on this progress and understanding, I have asked the Senate and House to remove the Section 899 protective measures from consideration. ... This understanding with our G7 partners provides greater certainty and stability for the global economy and will enhance growth and investment in the United States and beyond.
Under the deal, G7 allies will exclude U.S. companies from the Organization for Economic Cooperation and Development's (OECD) Pillar 2 taxes imposed by other countries in consideration for removing the Section 899 so-called "revenge tax" from the OBBB. The U.S. will work cooperatively to implement this agreement across the OECD-G20 Inclusive Framework.
Consistent with Secretary Bessent's request, Senate Finance Committee Chair Mike Crapo (R-Idaho) and House Ways and Means Committee Chair Jason Smith (R-Mo.) announced they will remove Section 899 from the OBBB. The chairs of the two tax-writing committees said in a joint statement announcing the pending removal of Section 899 that the agreement would "preserve U.S. tax sovereignty and allow U.S. tax laws to co-exist with the Pillar 2 regime."
The agreement is a welcome development to many. Proposed Section 899 – as passed by the House and contained in H.R. 1, the OBBB, and a refined version, contained in the Senate Finance Committee's bill of the OBBB – would have imposed severe U.S. tax retaliatory measures against any foreign government and its residents and entities, called "applicable persons," imposing "unfair taxes." The intent underlying the proposed legislation was to pressure foreign governments to repeal or modify such taxes adverse to U.S. interests.
The retaliatory measures would have included an Internal Revenue Code statutory tax rate increase and an enhanced Base Erosion and Anti-Abuse Tax (BEAT) on applicable persons of foreign countries imposing "unfair taxes."
Great concern had been expressed by Wall Street and affected stakeholders about the enactment of Section 899 and its impact on foreign investment in the United States, particularly in view of its complexity, potential scope of application and compliance obligations. Those concerns have been alleviated for now, and time will tell regarding the next steps to be taken with the G7 and the OECD-G20 Inclusive Framework.
The authors thank Holland & Knight Partner Mark Melton for his review and comments.
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