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A new section buried deep in U.S. President Donald Trump’s sweeping new tax reform dubbed the “big, beautiful bill” is triggering alarm among Australian investors, superannuation funds, and multinational companies. Section 899 provision, introduces a new escalating tax on “foreign persons of discriminatory foreign countries” starting at 5% and potentially climbing to 20% annually.
Though not naming Australia directly, U.S. officials have previously cited Australia’s diverted profits tax and news media bargaining code as unfair policies, placing the country at potential risk of inclusion.
Why Australian Investors Are Concerned
- Multinational companies, family offices, and super funds with U.S. investments could face heavy tax penalties.
- The new tax may override existing bilateral tax treaties, including the U.S.–Australia Free Trade Agreement.
- The vague language gives the U.S. Treasury broad discretion to label tax policies as discriminatory.
“If this passes, it’s going to be incredibly punitive actually to invest in the United States,” said Michael Brown, senior analyst at Pepperstone in Melbourne.
What Is Section 899?
Section 899 proposes a graduated tax on foreign investors from countries deemed to have “unfair tax practices.” It’s widely seen as a bargaining tactic to pressure governments into revising tax and digital service laws that disadvantage U.S. companies like Google and Meta.
While the bill has cleared the U.S. House of Representatives, it still faces debate in the Senate, where its final form could change.
“It’s a financial guillotine over Australian super funds and millions of Australians by extension,” said economist Steven Hamilton.
Diplomatic & Legal Repercussions
- The Australian government denies its tax policies are discriminatory or extraterritorial.
- Legal analysts suggest the law could override tax treaty protections, though this would likely be contested in court.
- The Trump administration is also pursuing tariff increases against countries it views as unfair traders.
The Australian government maintains it is working within OECD and G20 frameworks to ensure international tax fairness.
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