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During a September 9 meeting, Treasury official Kenneth Kies told lawmakers that the Treasury Department would support reviving the proposed Section 899 "revenge tax" (discussed here) if the Organization for Economic Cooperation and Development ("OECD") does not deliver on its commitment to exempt U.S. companies from key parts of the global minimum tax.
Section 899 was initially included in the One Big Beautiful Bill Act ("OBBBA") and would have imposed increased tax rates on residents of jurisdictions imposing "unfair foreign taxes" on U.S. taxpayers. Section 899, nicknamed the "revenge tax" because it was designed to retaliate against the OECD's 15% global minimum tax, which the Biden Administration previously negotiated but the United States never adopted. It was also aimed at digital services taxes and other taxes deemed discriminatory against U.S. companies by the Trump Administration.
The provision initially raised significant concern among business and finance leaders because of the perception that it would significantly increase the cost of foreign investment in the United States. Section 899 was ultimately dropped from the OBBBA after Treasury announced a deal with the United States' G7 allies to exclude U.S. companies from two of the three main global minimum tax rules. Treasury gave the OECD negotiating partners until December 31 to agree on a plan to implement the deal.
Concerns have grown that the OECD will be unable to secure an agreement within Treasury's timeframe after confidential documents were leaked showing that dozens of countries oppose a system that would exempt U.S. companies from key parts of the global minimum tax, and Kies's statement will likely put additional pressure on the OECD to rewrite large parts of the global minimum tax framework by year-end.
Kies's recent threat is not the only instance of public pressure on overseas tax policymakers from the Trump Administration. On August 25, after the European Union ("EU") fined Google for breaching EU antitrust rules, Trump posted on Truth Social that he will impose additional tariffs on all countries with digital taxes, legislation, rules or regulations.
It remains to be seen how the Trump Administration's public scrutiny of these foreign taxes will impact both U.S. tax policy and ongoing trade negotiations, and we will continue to provide updates in Brass Tax.
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