The One, Big, Beautiful Bill (H.R. 1) has just got the nod from the House and is now headed to the Senate for further tweaks. This tax package aims to solidify some of the provisions from the 2017 Tax Cuts and Jobs Act while throwing in some new international tax rules. One major highlight is the proposed Section 899 that plans to hike U.S. tax rates on foreign individuals and entities deemed to impose “unfair foreign taxes.” Here’s what you need to know.
Key Points
- The OBBB aims to make temporary tax cuts permanent and introduce new tax provisions.
- Section 899 would target foreign countries with “unfair foreign taxes” on U.S. persons, increasing U.S. tax rates for certain foreign individuals and entities.
- Tax rates could jump by 5 percentage points annually up to a maximum of 20 percentage points above the standard rate.
- Exemptions apply to U.S. citizens and residents, as well as foreign entities majority-owned by U.S. persons.
- The legislative history suggests tax treaties may be overridden by the new provisions in Section 899.
- Additional provisions include changes to SALT deductions, business interest deductions, and enhancements to various tax credits.
Why should I read this?
If you’re involved in finance, investment, or cross-border transactions, this isn’t just some dry tax talk—it’s a significant shift that could impact your dealings with foreign entities. The potential for increased U.S. tax rates on foreign lenders could affect loan agreements and derivatives contracts in significant ways. Having the details from this article could save you a headache down the line—trust us, it’s worth a read!