Close
An overview by Covington, Taxand USA
The US Treasury has recently announced a tentative deal with G7 partners to exempt US companies from OECD Pillar 2 taxes, prompting Congress to remove proposed Section 899 from its pending tax legislation. Section 899 would have increased US taxes on certain foreign investors and foreign-owned US corporations in retaliation for “unfair foreign taxes” such as digital services taxes and the OECD’s undertaxed profits rule (UTPR).
It aimed to raise up to $116 billion over a decade but faced criticism for administrative complexity, treaty override concerns, and uncertainty around digital services taxes and diverted profits taxes. President Trump’s decision to end trade talks with Canada over its digital services tax underscores ongoing tensions despite the G7 deal. Although section 899 is now withdrawn, its prior inclusion in both House and Senate bills indicates potential revival if the agreement falters.
Dirk Suringa, Michael Caballero, Christina Danberg Bubel and Jesse Boretsky from Covington, one of our US member firms, have published an alert providing a more detailed overview of these developments and their implications for foreign investors, multinational businesses, and cross-border tax planning strategies.
You can read the full alert here.
For similar content to our Global Guide, subscribe to our mailing list and keep up to date.