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US Fund executives lobby Congress for the provision laid into the tax bill of President Donald Trump, which, according to them, could lead to foreign investors “fast” by pulling out investments from the US
The “one big beautiful bill”, which went through the House of Representatives in May, seeks Penin foreign firms working in the US and are from countries with “unfair foreign taxes” according to the provision known as section 899. The Senate is currently being considered.
The Institute of Investment Campaign (ICI), which represents the Fund’s Houses in the US, lobbying the Congress for amendment because it warns the bill in its current form, also affects most foreign investments on the US stock markets, according to the CNBC documents.
“To avoid the impact of section 899, the investors of the portfolio will probably quickly recede from US shares, which will lead to the outflow of capital from the US,” said ICI in a letter sent to Senator Mike, chairman of the Senate Financing Committee, June 5, “when the sales sold by foreign investors and Investors.
What does Section 899?
Section 899 aimed at introducing tax measures against legal entities from countries that have levies such as digital taxes, and the world’s minimum tax rules. If you enter the law, it can affect investors from the European Union, the UK, Canada, Australia and Switzerland, among others.
The tax will start with 5% and grows by five percentage points to a maximum of 20%, except existing taxes that range from countries and tax treaties. This can return the refund for foreign investors to US shares.
An unintentional impact
The ICI letter also believes that the US Foundation Management industry, which collectively invested about $ 18 trillion in the US stock markets, will be “by -damage” with the influence of Section 899.
“However, we believe that the current drafting of the proposed section 899 should clarify its volume and avoid obstacles to foreign stock markets at the expense of” investment funds “, such as the US and ETFs mutual funds and their foreign counterparts (for example, use funds),” the ICI said.
The letter of the senator states: “Section 899 will lead to the fines of these funds and their shareholders by taxation of passive income from investment in US shares. Investment funds for this purpose will be detrimental to the attention intended in section 899.”
The ICI letter is sent to the Senate Financing Committee considered by CNBC.
Usually the funds charge in the percentage of assets under the guidance, and the withdrawal of foreign investors on section 899 can reduce the profit of the investment management firm.
The Senate Financing Committee refused to comment, and Senator’s office Mike Krap did not respond to a CNBC request.
Foreign investors own $ 19 trillion in US stock markets, $ 7 trillion in US government bonds and $ 5 trillion. US dollars, according to Apollo Global Management data.
The ICI noted that he greatly in support of the US government’s attempt to “defend business -interests abroad and decide discriminatory foreign taxes.” However, this warns that the current draft of the bill does the opposite.
“Some foreign governments may actually encourage this capital flight from the United States, as it benefits their local stock markets, which is not an impetus for behavior that seeks to reach section 899,” the statement said.
“Why do you keep” US stocks?
Yuri Khojamir, Chief Investment Director of Tema ETFS, said investors in Europe, which are focused on dividends distributing US companies, will “reflect” their possessions at this stage.
“If you suddenly have to pay the tax on this income, why do you consider it?” Hojamirian asked. Tema ETFs is running American reshuffle ETF This is available for both the US and foreign professional investors.
Tax experts believe the profit paid by foreign investors is likely to be affected by section 899 than capital gains and other shareholder distribution methods.
Tema ETFs Investment Chief has warned that the impact on the US stock will be relatively minimal as they say in the US S&P 500Usually not known by their dividends.
“In the United States, dividend yields are quite low. Not many companies that pay. And most of the capital is returning to share ransoms,” Khodamirian CNBC said. “It really will be such a big problem?”
