By David Lawder and Bhargav Acharya
(Reuters) -U.S. Treasury Secretary Scott Bessent said on Thursday that he has asked Republicans in Congress to scrap the Section 899 retaliatory tax proposal from their tax and spending bill after Washington reached an agreement with Group of Seven industrial countries.
Section 899 would have enabled President Donald Trump to retaliate against countries that impose taxes on U.S. firms under a 2021 global tax agreement that Trump considers unfair.
“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,” Bessent said in a post on X.
Bessent said that under the G7 agreement, the 15% global corporate minimum tax will not apply to U.S. companies under “Pillar 2” of the Organization for Economic Cooperation and Development tax deal. He added: “We will work cooperatively to implement this agreement across the OECD-G20 Inclusive Framework in coming weeks and months.”
The G7 agreement appeared to clear the way for Trump to make good on his inauguration day pledge to pull the U.S. out of the OECD tax deal negotiated by former President Joe Biden’s administration, with fewer consequences. An unfinished part of the global tax deal aimed to replace countries’ digital services taxes with a new arrangement to reallocate taxing rights on large, highly profitable U.S. multinational companies.
Bessent’s announcement comes after prominent House Republicans said on Wednesday that Section 899, which drew opposition among some in the party and U.S. 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.
(Reporting by Bhargav Acharya; Editing by David Gregorio)
