US Treasury Seeks to Remove a Controversial Tax Rule

The US Treasury has made a request to Congress to eliminate a specific part of Donald Trump's budget plan. This part, known as Section 899, was meant to impose extra taxes on investments from certain countries. The Treasury believes this rule is no longer necessary because of a recent agreement with other major economies. The Treasury secretary, Scott Bessent, explained that the US has come to an agreement with the G7 nations. This agreement means that the new global tax rules set by the OECD will not apply to US companies. As a result, the retaliatory tax measure in Trump's budget bill is no longer needed. The OECD's new tax regime, called Pillar 2, sets a minimum corporate tax rate of 15%. This rule allows countries to collect this tax if a company's home country does not enforce it. The Treasury's request to remove Section 899 comes after concerns from banks and investors. They warned that this rule could lead to less investment and a shift away from US assets. Bessent announced the Treasury's request on the social media platform X. He stated that the US will work with other countries to implement the agreement in the coming weeks and months. This development is part of a broader effort to harmonize tax policies among major economies. The request to remove Section 899 highlights the complexities of international tax policies. It also shows the importance of cooperation among countries to avoid economic disruptions. The Treasury's action aims to ensure a smoother implementation of the global tax regime.