The superannuation sector has welcomed confirmation that a controversial US tax provision will be removed.
US Senator Mike Crapo confirmed on Friday (AEST) that section 899 of the One Big Beautiful Bill Act will be removed at the request of US Treasury Secretary Scott Bessent, following a joint understanding between the US and G7 nations that secured concessions for US companies under the OECD global minimum tax regime.
“At the request of @SecScottBessent… we will remove proposed tax code Section 899,” Crapo posted on X.
Before Senator Crapo’s confirmation, US Treasury Secretary Scott Bessent had already signalled the shift in a series of social media posts.
He announced that under the deal, the US would be exempt from the OECD Pillar Two global minimum tax, which introduces a 15 percent minimum corporate tax rate and allows other countries to collect levies if companies’ home nations do not.
In return, Bessent said he had formally requested Congress remove section 899 from the One Big Beautiful Bill, calling the measure unnecessary in light of the new multilateral understanding.
“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. President Trump paved the way for this historic achievement,” Bessent Tweeted.
“On January 20, the President issued two Executive Orders instructing Treasury to defend US tax sovereignty, and as a result of President Trump’s leadership we now have a great deal for the American people.”
Section 899, which was included in a sprawling House bill passed in May, would have allowed the US Treasury to label certain countries as “discriminatory” and apply escalating withholding taxes – potentially up to 20 per cent – on US-sourced income from investors in those jurisdictions.
The measure drew concern from Treasurer Jim Chalmers – particularly because superannuation funds hold an estimated US$450 billion in US assets – who confirmed this week that he raised the issue directly with Bessent.
James Koval, chief policy and advocacy officer at the Association of Superannuation Funds of Australia (ASFA), welcomed the development but emphasised the need for continued vigilance.
“This is a really welcome step from the US Treasury Secretary and the superannuation sector is monitoring developments closely,” Koval said in a statement on Friday.
“There’s still a way to go – the amendments need to be made by lawmakers. There are a number of other amendments under consideration.”
Koval described section 899 as a provision that would have shifted the risk-return dynamics of US investments, creating adverse consequences for investors.
“The superannuation sector has around US$450 billion invested in the United States, the single largest market outside of Australia. This is money invested in US infrastructure, equities, bonds, and other areas,” he said.
“ASFA has engaged closely with the Australian government on this issue.
“We know the Australian government has been engaging strongly with their US counterparts and have been communicating the negative impact this measure could have on investment in the United States. It is welcome to see the US government listening and considering changes.”
In a written statement to InvestorDaily, UniSuper’s chief investment officer said: “It’s obviously a relief and in both countries’ best interest.”
Earlier modelling by Mandala Partners estimated that if implemented in its original form, section 899 could have wiped out more than A$3.5 billion in returns for Australian superannuation members over just four years.
