Clicky

  • Login
  • Register
  • Submit Your Content
  • Contact Us
Monday, June 16, 2025
World Tribune
No Result
View All Result
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food
Submit
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food
No Result
View All Result
World Tribune
No Result
View All Result

U.S. foreign tax bill sends jitters across Wall Street

May 30, 2025
in News
Reading Time: 5 mins read
A A
U.S. foreign tax bill sends jitters across Wall Street
0
SHARES
ShareShareShareShareShare

U.S. President Donald Trump speaks during a swearing in ceremony for U.S. Attorney for Washington, D.C. Jeanine Pirro in the Oval Office of the White House on May 28, 2025 in Washington, DC.

Andrew Harnik | Getty Images

While U.S. President Donald Trump’s tariffs play out in U.S. courts, another one of his proposed laws could weaponize the American tax system.

Investment banks and law firms warn this step could prove to be as significant as the impact of duties on investors.

The “One Big Beautiful Bill Act,” which passed through the U.S. House of Representatives last week, includes the most sweeping changes to the tax treatment of foreign capital in the U.S. in decades under a provision known as Section 899. The bill must still gain the Senate’s approval.

“We see this legislation as creating the scope for the US administration to transform a trade war into a capital war if it so wishes,” said George Saravelos, global head of FX research at Deutsche Bank on Thursday.

“Section 899 challenges the open nature of US capital markets by explicitly using taxation on foreign holdings of US assets as leverage to further US economic goals,” Saravelos added in the note to clients, under the subtitle “weaponization of US capital markets in to law.”

Section 899 says it will hit entities from “discriminatory foreign countries” — those that impose levies such as the digital services taxes that disproportionately affect U.S. companies.

France, for instance, has a 3% tax on revenues from online platforms, which primarily targets big technology firms such as Google, Amazon, Facebook, and Apple. Germany is reportedly considering a similar tax of 10%.

What does the proposed tax do?

Under the new tax bill, the U.S. would hit investors from such countries by increasing taxes on U.S. income by 5 percentage points each year, potentially taking the rate up to 20%.

Emmanuel Cau, head of European Equity Strategy at Barclays, suggested that the mere passage of the tax legislation could make dollar assets less valuable for foreign investors.

“In our view, this is a risk for those companies generating US revenues, and domiciled in countries that have enacted Digital Services Taxes (DST) or are implementing the OECD’s Under Taxed Payment Rule (UTPR),” Cau said in a Friday note to clients.

He highlighted companies such as London-listed Compass Group, which provides catering services to U.S. schools, and InterContinental Hotels, which owns at least 25 luxury hotels in the U.S., are likely to be affected by the proposed law.

“Given US net international investment position is sharply negative, there is indeed scope for capital outflows if indeed S899 passes through the Senate in its current form,” he added.

U.S. foreign tax bill sends jitters across Wall Street

The impact of the bill won’t be limited to European companies or individuals from those states.

The bill “could significantly increase tax rates applicable to certain non-U.S. individuals and business, governmental, and other entities,” said Max Levine, head of U.S. tax at the law firm Linklaters.

READ ALSO

Israel vows Iran will ‘pay the price’ as attacks continue for a fourth day

Taiwan blacklists China’s Huawei and SMIC, aligning more with U.S. policy

This means it could also ensnare governments and central banks, which are large investors of U.S. Treasuries. France and Germany, for instance, held a combined $475 billion worth of U.S. government bonds as of March.

The proposed tax would lower returns on U.S. Treasuries for those investors as “the de facto yield on US Treasuries would drop by nearly 100bps,” Deutsche Bank’s Saravelos added. “The adverse impact on demand for USTs and funding the US twin deficit at a time when this is most needed is clear”.

“It’s very bad,” said Beat Wittmann, chairman of Switzerland-based Porta Advisors. “This is huge — this is just one piece in the overall plan and it’s completely consistent with what this administration is all about.”

“The ultimate judge for this is not our opinions, it’s the bond market,” Wittmann added. “The U.S. bond market is discounting these developments, and we have seen in the last few weeks, that if there was a safe haven move, investors clearly prefer German bunds.”

Large Australian pension funds with U.S. investments have also been reportedly concerned by the bill, since Australia operates a medicines subsidy scheme that is opposed by large U.S. pharmaceutical companies.

Legal experts at the Mayer Brown law firm suggest that “significant changes” could be made to the bill as it passes through the U.S. Senate before it’s enshrined into law by Trump.

“As such, there may be questions about whether the provisions of the proposal that override tax treaties could be included in the US Senate’s version of the tax bill,” Mayer Brown’s experts said.

Credit: Source link

ShareTweetSendSharePin
Previous Post

Fan ‘paid a witch’ on Etsy to save Knicks season — and Stephen A. Smith couldn’t be happier

Next Post

ICE announces a leadership shake-up as the Trump administration sets a goal of 3,000 arrests per day

Related Posts

Israel vows Iran will ‘pay the price’ as attacks continue for a fourth day
News

Israel vows Iran will ‘pay the price’ as attacks continue for a fourth day

June 16, 2025
Taiwan blacklists China’s Huawei and SMIC, aligning more with U.S. policy
News

Taiwan blacklists China’s Huawei and SMIC, aligning more with U.S. policy

June 16, 2025
China retail sales, industrial output, fixed asset investment in May
News

China retail sales, industrial output, fixed asset investment in May

June 16, 2025
Why aren’t Chinese consumers spending enough
News

Why aren’t Chinese consumers spending enough

June 16, 2025
How AI is disrupting the advertising industry
News

How AI is disrupting the advertising industry

June 15, 2025
What I learned following Jensen Huang around Europe
News

What I learned following Jensen Huang around Europe

June 14, 2025
Next Post
ICE announces a leadership shake-up as the Trump administration sets a goal of 3,000 arrests per day

ICE announces a leadership shake-up as the Trump administration sets a goal of 3,000 arrests per day

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

What's New Here!

Study combines NLP, conventional coding to improve dementia detection

Study combines NLP, conventional coding to improve dementia detection

May 20, 2025
Apple’s M3 iPad Air drops to a record-low price

Apple’s M3 iPad Air drops to a record-low price

June 2, 2025
Best Memorial Day tech sales from Amazon, Apple, Samsung and others that you can shop now

Best Memorial Day tech sales from Amazon, Apple, Samsung and others that you can shop now

May 22, 2025
Knicks stars party with celebs at private party

Knicks stars party with celebs at private party

May 18, 2025
Pat McAfee tells John Mellencamp to ‘shut the f–k up’ in fiery Pacers fan feud

Pat McAfee tells John Mellencamp to ‘shut the f–k up’ in fiery Pacers fan feud

May 31, 2025
SynthID Detector can check media to see if it was generated with Google’s AI tools

SynthID Detector can check media to see if it was generated with Google’s AI tools

May 20, 2025
Big Oil’s record-breaking shareholder payouts under threat

Big Oil’s record-breaking shareholder payouts under threat

May 23, 2025

About

World Tribune is an online news portal that shares the latest news on world, business, health, tech, sports, and related topics.

Follow us

Recent Posts

  • Stock markets are ignoring the war as they wait for the Fed
  • Israel vows Iran will ‘pay the price’ as attacks continue for a fourth day
  • Taiwan blacklists China’s Huawei and SMIC, aligning more with U.S. policy
  • Man suspected of shooting 2 Minnesota lawmakers caught

Newslatter

Loading
  • Submit Your Content
  • Contact Us
  • Privacy Policy
  • Terms of Use
  • DMCA

© 2024 World Tribune - All Rights Reserved!

No Result
View All Result
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food

© 2024 World Tribune - All Rights Reserved!

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In