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While US President Donald Trump tariffs Play in US CourtsAnother one of his laws may arm the US tax system.
Investment banks and law firms warn that this step may be as significant as the impact of investors.
“One Big Big Bill”, which went through the US House last week, includes the widest changes in the tax appeal to foreign capital in the US for decades in accordance with the provision known as section 899. The legislation should still obtain the approval of the Senate.
“We view this legislation as creating an opportunity for the US administration to turn the trade war into a capital war if it wishes,” said George Saraveles, head of the FX Research in Deutsche Bank on Thursday.
“Section 899 disputes the open character of the US capital markets, clearly using the taxation of foreign assets of the United States as use for further economic purposes in the US,” Saravel added to the client’s note, under the sub -head of the US capital markets in law. “
Section 899 The bill states that it will get into the organization of “discriminatory foreign countries” – those that impose levies, such as taxes on digital services that are disproportionately affecting US companies.
Eg Google. Amazon. Facebook is Facebook at Facebook.and Apple. Germany is reported by considering A similar tax of 10%.
What does the proposed tax make?
According to the new tax bill, the United States would have affected investors from such countries, increasing income taxes in 5 percentage points each year, potentially taking a rate to 20%.
Emmanuel Kau, Head of the European Justice Strategy Department in Barclays, suggested that the simple adoption of tax legislation could make assets in dollars less valuable.
“In our opinion, this is a risk to those companies that bring revenue in the US and reside in the countries that have participated in digital services (DST) or implement the OECD under the taxable payment rule (UTPR),” the clients said on Friday.
He emphasized companies such as the London List Group of compassproviding catering services for American schools and Intercontinental hotelsThe US -owned high -luxury hotels may affect the proposed law.
“Given that the pure international investment position is sharply negative, there is really an opportunity for capital outflow when the S899 goes through the Senate in its current form,” he added.
The influence of the bill will not be limited to European companies or people from these states.
The bill “can significantly increase tax rates applied to some people who are not in the US, and business, government and other subjects,” said Max Levin, the head of the US tax at the law firm Linklaters.
This means it can also pick up governments and central banks that are great investors US Treasury. For example, France and Germany conducted a united 475 billion dollars US government bonds are on March.
The proposed tax will reduce the profitability in the US Treasury for these investors, as “in fact the yield in the US Treasury will decrease by almost 100 points / s,” added Saravel Deutsche Bank. “An unfavorable impact on the demand for USS and the financing of two in the US at a time when it is most necessary.”
“This is very bad,” said Bit Wittman, chairman of the Porto Advisors, based in Switzerland. “It is huge – it’s just one piece in general, and it fits what it is about.”
“The final judge for this is not our opinion, it is a bond market,” Vitman added. “The American bond market has reduced these events and we have seen over the past few weeks that when there was a safe shelter, investors clearly prefer German rebels“
Large Australian retirement funds with US investment were also Reportedly concerned by the billBecause Australia manages a subsidy scheme for a medicine that opposes major pharmaceutical companies in the US.
Law experts of the law firm Mayer Brown believe that “significant changes” may be made to the bill if it passes through the US Senate before it is secured by Trump to the law.
“Thus, there may be questions about whether the provisions of the proposal to cancel the tax agreements in the US Senate Tax Bill,” said Mayer Brown experts.
