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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, known as Pillar 2, 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 Pillar 2 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 deal on Pillar 2 came after “after months of productive dialogue”.
Pillar 2 taxes formed part of an OECD deal, agreed in 2021 as part of the biggest global tax reform for more than a century.
The second pillar introduces a global minimum 15 per cent corporate tax rate and started to take effect this year, with measures allowing other countries to collect the minimum tax if companies’ home countries do not.
This is a developing story
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