US: Section 899 may be weakened in the near future – Commerzbank

Source Fxstreet

Last night, Republican senators presented their version of the 'Big Beautiful Bill', which includes a number of changes. The proposed changes to Section 899 are likely to be particularly relevant for the US Dollar (USD), Commerzbank's FX analyst Michael Pfister notes.

Changing the Section 899 may not solve the fundamental problem

"The House of Representatives proposed introducing a higher tax rate for companies from countries whose tax policies the US administration deems discriminatory, often referred to as a 'retaliatory tax'. This tax rate was to increase to 20% within four years. However, the Senate proposal now provides for a cap of 15%, postponing its introduction until 2027. The rate will continue to rise by 5 percentage points each year, which may allow room for negotiation during this period."

"This is certainly a step in the right direction for international investors concerned about suddenly having to pay higher taxes on their US investments. However, the proposal does not solve the fundamental problem. The US administration is rather one-sided in determining which international taxes it considers discriminatory. A frequently cited example is the value added tax, which the US administration strongly criticises."

"This is set at federal state level in the US, a fact that the US government always seems to overlook. This means that the US does indeed levy a value-added tax, just not at the highest level. Therefore, demanding a higher tax rate to compensate for this does not necessarily make sense. Whether the tax rate is 20% or 15% is not that important. The general uncertainty associated with Section 899 is likely to be more decisive. Unfortunately, the Republicans' Senate proposal does not address this issue."

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Gold Price Forecast: XAU/USD rallies to $3,820 amid a potential US government shutdownGold is trading above $3,800, after hitting fresh all-time highs at $3,819 on Monday's European session.
Author  FXStreet
21 hours ago
Gold is trading above $3,800, after hitting fresh all-time highs at $3,819 on Monday's European session.
placeholder
Silver Price rallies to $47.00 with US Government shutdown looming Silver remains bid on US Dollar weakness, at 4-year highs, near $47.00.
Author  FXStreet
20 hours ago
Silver remains bid on US Dollar weakness, at 4-year highs, near $47.00.
placeholder
Bitcoin Still Below Peak as Gold Climbs—Is a Catch-Up Rally Imminent?Gold prices climbed to a new all-time high in Asian trading hours on Monday, with spot prices surging to $3,800 per ounce.
Author  Beincrypto
20 hours ago
Gold prices climbed to a new all-time high in Asian trading hours on Monday, with spot prices surging to $3,800 per ounce.
placeholder
Global stocks, currencies, bonds, Bitcoin, oil and gold are all surging todayGlobal stocks climbed as Dow futures rose 17 points, S&P 500 and Nasdaq futures stayed flat, and European and Asian indexes posted broad gains.
Author  Cryptopolitan
20 hours ago
Global stocks climbed as Dow futures rose 17 points, S&P 500 and Nasdaq futures stayed flat, and European and Asian indexes posted broad gains.
placeholder
Alibaba surges 50% in September, tops Hang Seng tech indexThe Hong Kong-listed stock rose as much as 4.1% to over HK$173 during Monday’s session.
Author  Cryptopolitan
20 hours ago
The Hong Kong-listed stock rose as much as 4.1% to over HK$173 during Monday’s session.
Related Instrument
goTop
quote