The Two Most Feared Foreign Tax Provisions in the One Big, Beautiful Bill: Now Eliminated or Defanged
The One Big Beautiful Bill Act or the OBBBA is a major piece of US tax reform legislation. The OBBBA aimed to overhaul several aspects of the Internal Revenue Code, with a focus on extending the expiring tax provisions enacted by Trump under the Tax Cuts and Jobs Act in 2017.
The OBBBA originated in the House of Representatives with two proposed provisions nicknamed the “Revenge Tax” under Proposed Section 899 and the “Remittance Transfer Excise Tax” under Proposed Section 4475.
The Revenge Tax introduced a new US surtax aimed at companies and investors from countries that impose taxes deemed unfair to American businesses. From the time this bill was proposed until the G7 meeting, it was the most-discussed topic in the tax community. We've never witnessed such a surge of LinkedIn posts focused on this particular section.
The Remittance Transfer Excise Tax created a transaction-based excise tax imposed on outbound money transfers from the US. Anyone who transfers money from the US to another country must pay the excise tax, initially set at 5%, regardless of their legal status in the US. This applies to foreign workers on an H-1B visa, tourists making international transfers, and green card holders.
On June 16, 2025, the Senate Finance Committee unveiled draft text containing tax provisions that amend the House's version of the OBBBA.
Subsequently, on July 1, 2025, the Senate introduced further amendments to the OBBBA, creating the version that will be presented to Trump for his signature on July 4 (Independence Day). We are betting that Trump will opt for a dramatic backdrop, complete with fireworks, when he signs the OBBBA.
Under the soon-to-be-signed version of the OBBBA, the Revenge Tax has been completely eliminated, and the Remittance Transfer Excise Tax has been defanged. The excise tax rate has been lowered to 1% (from the initial 5%) and now only applies to remittance transfers where the sender uses cash, a money order, a cashier's check, or any other similar physical instrument to make the transfer.
Based on this progress and understanding, I have asked the Senate and House to remove the Section 899 protective measure from consideration in the One, Big, Beautiful Bill. 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. I thank Senator Crapo and Chairman Smith for their leadership that made this day possible.
