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Business Standard
2 days ago
- Business
- Business Standard
US Treasury deal with G7 kills 'revenge tax' that spooked Wall Street
By Daniel Flatley and Lauren Vella (BTAX) The Treasury Department announced a deal with G-7 allies that will exclude US companies from some taxes imposed by other countries in exchange for removing the Section 899 'revenge tax' proposal from President Donald Trump 's tax bill. 'OECD Pillar 2 taxes will not apply to US companies, and we will work cooperatively to implement this agreement across the OECD-G20 Inclusive Framework in coming weeks and months,' Treasury Secretary Scott Bessent said on social media Thursday. '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,' he added. The tax has sparked fears on Wall Street that the proposal would make it much harder for foreign individuals and companies to invest in the US. The levy targets allies that have digital services taxes on US tech companies, as well as countries imposing a global minimum tax on corporations. The market reaction was largely muted. The Bloomberg Dollar Index declined for a fourth day, Treasuries rallied and the S&P 500 approached an all-time high, all largely before the deal was announced late Thursday afternoon. 'Removing Section 899 from the budget negotiations would potentially allow investors to breathe a sigh of relief,' said Gennadiy Goldberg, head of US rates strategy at TD Securities. 'That said, it's difficult to know if the market seriously expected this statute to make it into the final law.' The measure included in Trump's bill came to be known as the revenge tax because it would increase tax rates only for countries whose tax policies the US deems 'discriminatory.' The Organization for Economic Co-operation and Development has been hosting global talks over corporate taxes, with some of the proposals drawing opposition from the US. The revenge tax targeted a part of the OECD's 15 per cent global minimum tax that former Treasury Secretary Janet Yellen helped negotiate while former President Joe Biden was in office. Republicans and Trump administration officials have criticized the deal for ceding US taxing authority to other countries. The global minimum tax is part of a larger deal agreed to by more 140 countries at the OECD that seeks to impose a 15 per cent minimum tax rate on multinational companies in every country where they operate. Trump's Treasury in recent weeks has pushed for the US tax system to be considered completely separate from the OECD's global tax framework, arguing that the US already robustly taxes income that American companies earn overseas. 'It's definitely a positive development for non-US investors who invest frequently in the US,' said Scott Semer, partner with Torys LLP in New York. 'It'll definitely be helpful to provide certainty to investments.'
The Advertiser
2 days ago
- Business
- The Advertiser
Super funds spared billions after US axes 'revenge tax'
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".
France 24
2 days ago
- Business
- France 24
US Treasury signals G7 deal excluding US firms from some taxes
"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 said in a series of social media posts. Nearly 140 countries struck a deal in 2021 to tax multinational companies, an agreement negotiated under the auspices of the Organisation for Economic Co-operation and Development (OECD). This deal has two "pillars," the second of which sets a minimum global tax rate of 15 percent. "OECD Pillar 2 taxes will not apply to US companies," he wrote, adding that officials will work to implement the agreement across the OECD-G20 Inclusive Framework in the coming months. US President Donald Trump has pushed back on the global tax agreement, with Bessent on Thursday pointing to advances on that front. "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," Bessent added, referring to a bill currently before US lawmakers that would slash social program spending for tax cuts. Section 899 has been dubbed a "revenge tax," allowing the government to impose levies on firms with foreign owners and on investors from countries deemed to impose unfair taxes on US businesses. The clause sparked concern that it would inhibit foreign companies from investing in the United States.
Sky News AU
2 days ago
- Business
- Sky News AU
ASX 200 up 0.5 per cent, adding more than $15b into local portfolios as US President Donald Trump dumps section 899 revenge tax, mulls tariff deadline
Aussie investors have been buoyed by news the United States' controversial 'revenge tax' will be ditched and Donald Trump's 'Liberation Day' tariffs deadline could be pushed back, adding more than $15b into local portfolios. The index was up 0.5 per cent in the first 40 minutes of trading with aluminium producer Alcoa Corporation rising 6.6 per cent, Capstone Copper jumping 6.5 per cent, Pilbara Minerals adding 5.1 per cent and Liontown Resources up five per cent. Materials stocks are surging on Friday with the sector rising 2.2 per cent, while the telecommunications sector is up 0.9 per cent. It follows White House press secretary Karoline Leavitt saying the July 9 deadline for Trump's sweeping tariffs may be extended. 'The deadline is not critical,' Leavitt said of the steep tariffs. She noted Trump could "simply provide ... countries with (a) deal if they refuse to make us one by the deadline' and set "a reciprocal tariff rate that he believes is advantageous for the United States'. Pressed on this, Ms Leavitt said: 'Perhaps it could be extended but that's a decision for the president.' This comes as US Treasury Secretary Scott Bessent has called on Republican lawmakers to scrap section 899 – known as the 'revenge tax' - after Prime Minister Anthony Albanese and Treasurer Jim Chalmers spoke to him directly. The section 899 in President Donald Trump's 'big beautiful bill' would allow the US to implement retaliatory taxes on nations his administration believes unfairly treats US firms – such as tech giants Meta and Alphabet. On Friday, Bessent posted on X that after months of productive dialogue, a 'joint understanding' among G7 countries would be announced. Bessent said that under the agreement, the 15 per cent global corporate minimum tax would not apply to US companies under "Pillar 2" of the OECD tax deal. He added: "We will work cooperatively to implement this agreement across the OECD-G20 Inclusive Framework in coming weeks and months." Wall Street bounced back on Thursday with the Dow Jones adding 0.9 per cent, the S&P 500 rising 0.8 per cent and the Nasdaq jumping one per cent. London's FTSE 250 Index soared 0.8 per cent, Germany's DAX was boosted 0.6 per cent and the STOXX Europe 600 finished up 0.1 per cent. New Zealand's NZX 50 Index is up 0.5 per cent on Friday while Japan's Nikkei 225 has added 1.2 per cent.
Sky News AU
3 days ago
- Business
- Sky News AU
US Treasury Secretary Scott Bessent calls for ‘revenge tax' to be scrapped after meeting with Albanese, Chalmers
US Treasury Secretary Scott Bessent has called on Republican lawmakers to scrap section 899 – known as the 'revenge tax' - after Prime Minister Anthony Albanese and Treasurer Jim Chalmers spoke to him directly. The section 899 in President Donald Trump's 'big beautiful bill' would allow the US to implement retaliatory taxes on nations his administration believes unfairly treats US firms – such as tech giants Meta and Alphabet. On Friday, Bessent posted on X that after months of productive dialogue, a 'joint understanding' among G7 countries would be announced. Bessent said that under the agreement, the 15 per cent global corporate minimum tax would not apply to US companies under "Pillar 2" of the OECD tax deal. He added: "We will work cooperatively to implement this agreement across the OECD-G20 Inclusive Framework in coming weeks and months." On Friday, Mr Albanese told reporters in Sydney he had spoken to Secretary Bessent on the sidelines of the G7 in Canada earlier this month about section 899. "This would (have had an) adverse impact on Australian investment if it had had been implemented, particularly on investment from superannuation companies," Mr Albanese said. "One of the things that we held earlier this year in Washington DC was a round table of Australian investment funds that are willing and keen to invest in the United States - it's just one way in which the Australia-US economic relationship is an important one." Treasurer Jim Chalmers on Wednesday told reporters he had discussed section 899 with US Treasury Secretary Scott Bessent and made Australia's case against the looming tax. 'I've engaged a lot with Australian investors over the course of the last couple of weeks on their concerns,' Mr Chalmers said. 'I was able to represent them and raise their concerns directly with US Treasury Secretary Bessent and I know that the Treasury Secretary is very focused on these issues as well. 'We hope that they can be resolved. 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.' Investors have expressed caution about investing in the United States over growing uncertainty surrounding section 899. Bessent's announcement comes after prominent House Republicans said on Wednesday that Section 899, which drew opposition among some in the party and US corporate interests, could be removed from the bill. Republicans are pushing for final votes as early as Saturday on the sweeping fiscal package, which extends 2017 tax cuts for individuals and adds new breaks, so that Trump can sign it into law before the July 4 U.S. Independence Day holiday. "This understanding with our G7 partners provides greater certainty and stability for the global economy and will enhance growth and investment in the United States and beyond," Bessent said. AMP economist My Bui said the 'revenge taxes' would make the US a 'less attractive' investment destination and that Australian super funds are rethinking how they will deploy their capital in the future. -with Reuters
