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An analysis by Borden Ladner Gervais, Taxand Canada
The U.S. House has recently passed the One Big Beautiful Bill Act, which includes Section 899—a provision enabling punitive tax measures against countries imposing “unfair foreign taxes,” such as Canada’s 2024 digital services tax (DST).
If enacted, Section 899 could raise U.S. withholding tax on Canadian investors’ dividends from 15% to as high as 50%, overriding treaty protections and potentially denying tax credits. This poses serious risks for Canadian investment funds, registered plans, and institutional investors, including diminished returns, compliance burdens, and portfolio restructuring. As the bill moves toward a possible July 4 enactment, Canadian stakeholders are urging changes, though Ottawa may be reluctant due to the DST’s significant projected revenue.
Marie-Claire Choueiri and Grace Pereira from our Canadian firm Borden Ladner Gervais have published an article analysing the bill and its implications for Canadian investors in further detail here.
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