Super funds spared billions after US axes 'revenge tax'

The Advertiser

2 days ago

Australian superannuation funds are breathing a sigh of relief after the US dropped a so-called "revenge tax" on foreign investors.
The super industry had been ringing alarm bells over section 899 of President Donald Trump's proposed "big beautiful bill", which would have raised taxes by up to 15 percentage points on foreign entities in retaliation for "unfair taxes" imposed on the US by other countries.
US Treasury Secretary Scott Bessent on Friday revealed the section would be removed from the bill after a deal was reached with the Group of Seven major industrialised nations, allowing it to drop a global minimum tax rate.
"After months of productive dialogue with other countries on the OECD Global Tax Deal, we will announce a joint understanding among G7 countries that defends American interests," he posted on the social media platform X.
"OECD Pillar Two taxes will not apply to U.S. companies, and we will work cooperatively to implement this agreement across the OECD-G20 Inclusive Framework in coming weeks and months.
"Based on this progress and understanding, I have asked the Senate and House to remove the Section 899 protective measure from consideration in the One, Big, Beautiful Bill."
Australia had been an enthusiastic supporter of the OECD Pillar Two agreement, which sought to implement a minimum global tax rate of 15 per cent and thereby limit multinationals from minimising taxes paid in Australia by shifting profits offshore.
The US withdrawal from the project further complicates federal government efforts to ensure multinationals pay their fair share of tax.
Prime Minister Anthony Albanese welcomed the removal of section 899, noting he raised the issue with Mr Bessent during a meeting at the recent G7 summit in Canada.
"This would adversely impact on Australian investment if it had been implemented, particularly on investment from superannuation companies," he told reporters in Sydney.
"And one of the things that we held earlier this year in Washington DC was a roundtable of Australian investment funds who are willing and keen to invest in the United States - just one way in which the Australia-US economic relationship is an important one."
The US news was met with a sigh of relief from the $4.2 trillion Australian superannuation industry, which would have been particularly exposed to the tax, given it holds almost $700 billion worth of US assets.
Modelling conducted for the Association of Superannuation Funds of Australia by consulting firm Mandala found it could have cut $3.5 billion from returns over the first four years.
"This is a really welcome step from the US treasury secretary and the superannuation sector is monitoring developments closely," said ASFA chief policy officer James Koval.
"There's still a way to go - the amendments need to be made by lawmakers; there are a number of other amendments under consideration.
"This section of the legislation would have changed the risk return profile of investment in the US, which would have been a poor outcome for all involved."
Treasurer Jim Chalmers also raised Australia's concerns about the tax during a phone call with Mr Bessent on Wednesday, later telling reporters he was hopeful of a positive outcome.
"We do not want to see our investors and our funds unfairly treated or disadvantaged when it comes to developments out of the US Congress," he said.
In a speech in June, Future Fund chair Greg Combet said US investments were a less attractive proposition for the sovereign wealth fund, in part because of the proposed tax hike contained in Mr Trump's "big beautiful bill".
Australian superannuation funds are breathing a sigh of relief after the US dropped a so-called "revenge tax" on foreign investors.
The super industry had been ringing alarm bells over section 899 of President Donald Trump's proposed "big beautiful bill", which would have raised taxes by up to 15 percentage points on foreign entities in retaliation for "unfair taxes" imposed on the US by other countries.
US Treasury Secretary Scott Bessent on Friday revealed the section would be removed from the bill after a deal was reached with the Group of Seven major industrialised nations, allowing it to drop a global minimum tax rate.
"After months of productive dialogue with other countries on the OECD Global Tax Deal, we will announce a joint understanding among G7 countries that defends American interests," he posted on the social media platform X.
"OECD Pillar Two taxes will not apply to U.S. companies, and we will work cooperatively to implement this agreement across the OECD-G20 Inclusive Framework in coming weeks and months.
"Based on this progress and understanding, I have asked the Senate and House to remove the Section 899 protective measure from consideration in the One, Big, Beautiful Bill."
Australia had been an enthusiastic supporter of the OECD Pillar Two agreement, which sought to implement a minimum global tax rate of 15 per cent and thereby limit multinationals from minimising taxes paid in Australia by shifting profits offshore.
The US withdrawal from the project further complicates federal government efforts to ensure multinationals pay their fair share of tax.
Prime Minister Anthony Albanese welcomed the removal of section 899, noting he raised the issue with Mr Bessent during a meeting at the recent G7 summit in Canada.
"This would adversely impact on Australian investment if it had been implemented, particularly on investment from superannuation companies," he told reporters in Sydney.
"And one of the things that we held earlier this year in Washington DC was a roundtable of Australian investment funds who are willing and keen to invest in the United States - just one way in which the Australia-US economic relationship is an important one."
The US news was met with a sigh of relief from the $4.2 trillion Australian superannuation industry, which would have been particularly exposed to the tax, given it holds almost $700 billion worth of US assets.
Modelling conducted for the Association of Superannuation Funds of Australia by consulting firm Mandala found it could have cut $3.5 billion from returns over the first four years.
"This is a really welcome step from the US treasury secretary and the superannuation sector is monitoring developments closely," said ASFA chief policy officer James Koval.
"There's still a way to go - the amendments need to be made by lawmakers; there are a number of other amendments under consideration.
"This section of the legislation would have changed the risk return profile of investment in the US, which would have been a poor outcome for all involved."
Treasurer Jim Chalmers also raised Australia's concerns about the tax during a phone call with Mr Bessent on Wednesday, later telling reporters he was hopeful of a positive outcome.
"We do not want to see our investors and our funds unfairly treated or disadvantaged when it comes to developments out of the US Congress," he said.
In a speech in June, Future Fund chair Greg Combet said US investments were a less attractive proposition for the sovereign wealth fund, in part because of the proposed tax hike contained in Mr Trump's "big beautiful bill".
Australian superannuation funds are breathing a sigh of relief after the US dropped a so-called "revenge tax" on foreign investors.
The super industry had been ringing alarm bells over section 899 of President Donald Trump's proposed "big beautiful bill", which would have raised taxes by up to 15 percentage points on foreign entities in retaliation for "unfair taxes" imposed on the US by other countries.
US Treasury Secretary Scott Bessent on Friday revealed the section would be removed from the bill after a deal was reached with the Group of Seven major industrialised nations, allowing it to drop a global minimum tax rate.
"After months of productive dialogue with other countries on the OECD Global Tax Deal, we will announce a joint understanding among G7 countries that defends American interests," he posted on the social media platform X.
"OECD Pillar Two taxes will not apply to U.S. companies, and we will work cooperatively to implement this agreement across the OECD-G20 Inclusive Framework in coming weeks and months.
"Based on this progress and understanding, I have asked the Senate and House to remove the Section 899 protective measure from consideration in the One, Big, Beautiful Bill."
Australia had been an enthusiastic supporter of the OECD Pillar Two agreement, which sought to implement a minimum global tax rate of 15 per cent and thereby limit multinationals from minimising taxes paid in Australia by shifting profits offshore.
The US withdrawal from the project further complicates federal government efforts to ensure multinationals pay their fair share of tax.
Prime Minister Anthony Albanese welcomed the removal of section 899, noting he raised the issue with Mr Bessent during a meeting at the recent G7 summit in Canada.
"This would adversely impact on Australian investment if it had been implemented, particularly on investment from superannuation companies," he told reporters in Sydney.
"And one of the things that we held earlier this year in Washington DC was a roundtable of Australian investment funds who are willing and keen to invest in the United States - just one way in which the Australia-US economic relationship is an important one."
The US news was met with a sigh of relief from the $4.2 trillion Australian superannuation industry, which would have been particularly exposed to the tax, given it holds almost $700 billion worth of US assets.
Modelling conducted for the Association of Superannuation Funds of Australia by consulting firm Mandala found it could have cut $3.5 billion from returns over the first four years.
"This is a really welcome step from the US treasury secretary and the superannuation sector is monitoring developments closely," said ASFA chief policy officer James Koval.
"There's still a way to go - the amendments need to be made by lawmakers; there are a number of other amendments under consideration.
"This section of the legislation would have changed the risk return profile of investment in the US, which would have been a poor outcome for all involved."
Treasurer Jim Chalmers also raised Australia's concerns about the tax during a phone call with Mr Bessent on Wednesday, later telling reporters he was hopeful of a positive outcome.
"We do not want to see our investors and our funds unfairly treated or disadvantaged when it comes to developments out of the US Congress," he said.
In a speech in June, Future Fund chair Greg Combet said US investments were a less attractive proposition for the sovereign wealth fund, in part because of the proposed tax hike contained in Mr Trump's "big beautiful bill".
Australian superannuation funds are breathing a sigh of relief after the US dropped a so-called "revenge tax" on foreign investors.
The super industry had been ringing alarm bells over section 899 of President Donald Trump's proposed "big beautiful bill", which would have raised taxes by up to 15 percentage points on foreign entities in retaliation for "unfair taxes" imposed on the US by other countries.
US Treasury Secretary Scott Bessent on Friday revealed the section would be removed from the bill after a deal was reached with the Group of Seven major industrialised nations, allowing it to drop a global minimum tax rate.
"After months of productive dialogue with other countries on the OECD Global Tax Deal, we will announce a joint understanding among G7 countries that defends American interests," he posted on the social media platform X.
"OECD Pillar Two taxes will not apply to U.S. companies, and we will work cooperatively to implement this agreement across the OECD-G20 Inclusive Framework in coming weeks and months.
"Based on this progress and understanding, I have asked the Senate and House to remove the Section 899 protective measure from consideration in the One, Big, Beautiful Bill."
Australia had been an enthusiastic supporter of the OECD Pillar Two agreement, which sought to implement a minimum global tax rate of 15 per cent and thereby limit multinationals from minimising taxes paid in Australia by shifting profits offshore.
The US withdrawal from the project further complicates federal government efforts to ensure multinationals pay their fair share of tax.
Prime Minister Anthony Albanese welcomed the removal of section 899, noting he raised the issue with Mr Bessent during a meeting at the recent G7 summit in Canada.
"This would adversely impact on Australian investment if it had been implemented, particularly on investment from superannuation companies," he told reporters in Sydney.
"And one of the things that we held earlier this year in Washington DC was a roundtable of Australian investment funds who are willing and keen to invest in the United States - just one way in which the Australia-US economic relationship is an important one."
The US news was met with a sigh of relief from the $4.2 trillion Australian superannuation industry, which would have been particularly exposed to the tax, given it holds almost $700 billion worth of US assets.
Modelling conducted for the Association of Superannuation Funds of Australia by consulting firm Mandala found it could have cut $3.5 billion from returns over the first four years.
"This is a really welcome step from the US treasury secretary and the superannuation sector is monitoring developments closely," said ASFA chief policy officer James Koval.
"There's still a way to go - the amendments need to be made by lawmakers; there are a number of other amendments under consideration.
"This section of the legislation would have changed the risk return profile of investment in the US, which would have been a poor outcome for all involved."
Treasurer Jim Chalmers also raised Australia's concerns about the tax during a phone call with Mr Bessent on Wednesday, later telling reporters he was hopeful of a positive outcome.
"We do not want to see our investors and our funds unfairly treated or disadvantaged when it comes to developments out of the US Congress," he said.
In a speech in June, Future Fund chair Greg Combet said US investments were a less attractive proposition for the sovereign wealth fund, in part because of the proposed tax hike contained in Mr Trump's "big beautiful bill".