The U.S. Treasury Department has called on Congress to eliminate a controversial provision—Section 899—from former President Donald Trump’s budget bill. The provision would have allowed the U.S. to impose retaliatory taxes on foreign companies and investors from countries deemed to have “punitive” tax policies under the OECD’s new global minimum tax regime.
Treasury Secretary Scott Bessent announced that Section 899 is no longer necessary due to a new understanding reached with fellow G7 countries. The agreement, still pending formal OECD adoption, would shield U.S. companies from top-up taxes under Pillar 2 of the OECD tax framework, which enforces a global minimum corporate tax rate of 15%.
The measure has already passed the House of Representatives and is now being reviewed by the Senate. Late Thursday, Republican leaders from both the Senate Finance Committee and the House Ways and Means Committee confirmed they plan to drop Section 899 from the bill. The global minimum tax is part of a two-pillar agreement reached by over 135 countries in 2021. While Pillar 1, aimed at reforming taxation for digital giants, remains unimplemented, Pillar 2 was adopted by several countries in 2024. It allows nations to impose extra taxes if multinationals don’t meet the 15% minimum in other jurisdictions.
The “undertaxed profits rule”—a key part of Pillar 2—has faced strong opposition from U.S. Republicans, who argue it unfairly targets American businesses. In striking this deal, the U.S. Treasury hopes to safeguard American competitiveness while maintaining cooperation with international tax reform efforts. If successful, it could signal a significant step toward a more stable and coordinated global tax environment.