Davis Polk partner Michael Mollerus discussed the Section 899 provision of the One Big Beautiful Bill Act and its potential impact on foreign investors and companies with Bloomberg.

Section 899 would create a new tax regime targeting residents of “discriminatory foreign countries” that impose “unfair foreign taxes” on U.S. persons. The increased tax rates would apply to any individual (other than a citizen or resident of the United States) who is a tax resident of a discriminatory foreign country, any corporation that is a resident of, or more than 50% owned (by vote or value) by residents of, a discriminatory foreign country, and certain foreign partnerships, branches, trusts and other entities identified with respect to a discriminatory foreign country by the Secretary.

Michael explained that a French or British bank, for example, “will have to assess whether or not it wants to continue to make loans if it’s running the risk of incurring this uncompensated withholding tax.”

“US Borrowers Face Higher Interest If Trump’s ‘Revenge Tax’ Becomes Law,” Bloomberg (June 4, 2025) (subscription required)

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