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Politico
20 hours ago
- Business
- Politico
Congress gets into the global tech tax battle
With help from Aaron Mak There's been a high-stakes global tax fight over tech for a decade, with billions of dollars at stake for leading U.S. companies. The fight is over digital services taxes — fees charged on search engines, online marketplaces and social media services — which more than 30 countries around the world have imposed or approved since 2016. Now, Congress is pushing a very Trumpian way to fight back: a revenge tax. The proposal for the tax, included in the reconciliation bill moving on Capitol Hill, is upsetting U.S. allies, foreign companies and American business lobbyists. And although U.S. tech companies would benefit from the measure, it's not clear that the industry even wants this solution. The argument is raising questions over what's possible — and wise — when it comes to the U.S. fighting overseas tech regulation. American tech companies hate digital services taxes, and have openly asked for help in fighting them. Six industry groups, including the Computer and Communications Industry Association, the Consumer Technology Association and the Information and Technology Industry Council, wrote on June 3 to Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer. The groups called for 'decisive action' on 'discriminatory' digital services taxes. In particular, the letter pointed to Canada's newly imposed DST that applies a 3 percent levy on revenues from some digital services, and the U.K.'s tax, which imposes a 2 percent levy on similar revenues, saying the two together 'represent the largest burden on U.S. firms and the U.S. Treasury, costing billions of dollars in lost revenue.' President Donald Trump vowed to respond to digital services taxes with tariffs and other tools in a February memo, writing: 'American businesses will no longer prop up failed foreign economies through extortive fines and taxes.' Trump also called for a possible renewal of unfair trade probes from his first term into countries that impose DSTs, including France, Austria, Italy, Spain, Turkey and the United Kingdom. As that happens, Congress has entered the fray with a remedy. Deep inside the 1,000-plus-page megabill passed by the House lies the 'revenge tax,' also known as Section 899 — a provision that would target countries with tax policies the U.S. says are unfair to Americans. Those include the digital services tax that applies to online business, as well as another mechanism known as the undertaxed profits rule, which some countries could use to tax U.S.-based businesses under a global tax treaty signed by more than 140 countries. The measure will allow the U.S. to impose higher taxes — up to 20 percentage points phased in over four years — on foreign companies, investors and individuals from countries that impose those 'unfair taxes' on American business interests. Bessent recently told Congress, 'This bill will allow us to prevent our corporate revenues from being drained into foreign treasuries — and that is in the hundreds of billions of dollars.' This revenge tax has scared foreign business leaders, especially from Canada, which is set to collect its first digital services tax payment on June 30. Gaphel Kongtsa, director of international policy for the Canadian Chamber of Commerce, said he and some 30 business leaders spent last week lobbying the Senate against the 'revenge tax.' Kongtsa said his message to Congress is twofold: First, Canada's DST is unpopular and a new government there may roll it back. And second, the U.S. tax measure could deter Canadian investment and further destabilize trade relationships at a time when American and Canadian leaders are working on a trade deal that could include lifting the digital levy. 'We feel like there's ways to resolve this problem without Section 899,' he said, adding, 'what we don't want is to shift what is now a trade war into a capital war.' Other global industry groups are weighing in as well. The Global Business Alliance, representing 200 major international companies including Taiwanese chip giant TSMC and Dutch ASML, met with some 60 offices in Congress last week, according to its president Jonathan Samford. The group put out a report last week finding Section 899 could eliminate up to 700,000 U.S. jobs. A tax expert from Japan, granted anonymity to speak freely, said leading companies from his country also hit the Hill last week to press against the revenge tax. The overseas tax issue certainly has the American tech industry's attention — but conversations with the groups that signed the June 3 letter show they have mixed feelings on retaliating against DSTs via Congress. The CTA has not commented on Section 899. Nor has the CCIA, although it said it is urging American trade officials 'to negotiate a resolution to this trade dispute before the end of the month.' The ITI has yet to weigh in on the megabill measure either; its most recent statement once again asked the White House to act against Canada's DST 'and ultimately secure its withdrawal.' The long-term projected effects of Section 899 are mixed. An estimate of the bill's effect by the nonpartisan Joint Committee on Taxation found it would at first raise tax revenue in the U.S., but would likely lead to lower tax revenues within eight years because it would drive foreign investors away. Adam Michel, a tax expert at the libertarian Cato Institute, said he could see a world where the 'revenge' portion of Section 899 scares countries into removing their digital services taxes. 'But if it doesn't have the intended effect of changing foreign tax policy,' he said, 'then you're left with both the original bad taxes and a new very destructive tax on top of it.' The Wall Street Journal pushed back against what it called 'a freakout' over Section 899. It said in an editorial the retaliatory tax is not a 'blunt-force protectionist tool', and that it leaves time for other countries to negotiate their taxes down. What's next? Kongtsa, from Canada's Chamber of Commerce, thinks Ottawa should make a strategic concession on the DST: He says he hopes Canada will drop the tax as part of negotiations with the U.S. and Mexico to review the USMCA agreement hammered out in Trump's first administration. For the House Ways and Means Committee that passed Section 899 in the first place, perhaps that was the whole point, according to a recent statement from its chair, Rep. Jason Smith (R-Mo.). 'If these countries withdraw these taxes and decide to behave, we will have achieved our goal,' he said. Tech execs get even closer to the Pentagon Just how close is the Trump administration to Palantir? Apparently, when a group of new tech executives joined the Army Reserve, it was Palantir's idea. On Friday, Army Chief of Staff Gen. Randy George swore four tech executives into the U.S. Army Reserve: Palantir CTO Shyam Sankar, Meta CTO Andrew 'Boz' Bosworth, OpenAI Chief Product Officer Kevin Weil and Thinking Machines adviser Bob McGrew. POLITICO's Christine Mui spoke to George's communications adviser, Col. Dave Butler, over the weekend for the California Decoded newsletter, and he told her the idea came from Sankar. 'Shyam, in his overwhelming patriotism came to us, and said 'I want to join the Army. I want to wear the cloth of the nation. Just doing what I can do to help from Palantir isn't enough,'' Butler said. 'Then he said, 'I've recruited three other guys to come with me.'' Sankar and his associates will serve as lieutenant colonels, but won't be required to resign their corporate jobs. They will advise the military on issues like recruiting high-skilled workers and integrating commercial technology. The appointments are part of a new military initiative known as Detachment 201, which seeks to retain tech executives for guidance. Sankar's role in driving the appointments is notable given Palantir's increasing involvement with the administration. Co-founder Peter Thiel was one of Trump's earliest backers from the tech industry. Trump tapped the company to help implement his March executive order to augment data sharing across agencies, potentially providing it extensive access to Americans' personal information. Microsoft fortifies European 'cloud sovereignty' The European Union just got a little closer to keeping control over its troves of data. Microsoft announced new features on Monday enabling European cloud clients to better supervise their data, as Mathieu Pollet reports for POLITICO EU. The upgrades include a new system called Data Guardian, which ensures that only Microsoft employees residing in Europe can remotely access cloud systems in the area, building on the company's previous 'sovereign cloud' initiatives. This raft of new cloud features comes as the EU works toward 'technological sovereignty,' a term that European Commission President Ursula von der Leyen began using in 2019 for her strategy to turbocharge the union's innovation and help it compete with the dominant American and Chinese tech players. The EU appointed Finland's Henna Virkkunen as its inaugural tech sovereignty commissioner in December. Von der Leyen's vision has gained momentum over the past year, especially as the Trump administration gets pushy on international trade. Yet practical obstacles still stand in the way given the extent to which the EU currently depends on foreign tech. Notably, the data in the new system is still being managed by Microsoft, an American company. The European Commission released an International Digital Strategy in early June emphasizing the need to strengthen transnational partnerships, especially given 'the superior ability of the US to innovate, scale-up globally and succeed in the tech sector.' post of the day THE FUTURE IN 5 LINKS Stay in touch with the whole team: Aaron Mak (amak@ Mohar Chatterjee (mchatterjee@ Steve Heuser (sheuser@ Nate Robson (nrobson@ and Daniella Cheslow (dcheslow@
Business Recorder
5 days ago
- Business
- Business Recorder
OGDCL announces oil, gas discovery at Faakir-1 Well in Khairpur
ISLAMABAD: Oil and Gas Development Company Limited (OGDCL) on Thursday announced a significant oil and gas discovery from its exploratory efforts at the Faakir-1 well, located within the Bitrisim Exploration License area in Khairpur district of Sindh. The well is operated by OGDCL with a 95% working interest, in a joint venture with Government Holdings (Private) Limited (GHPL), which holds the remaining 5% stake. Spud on December 31, 2024, as an exploratory well, the Faakir-1 well was drilled to a total depth of 4,185 meters in the Sembar Formation. The drilling operation was executed using OGDCL's in-house expertise in close collaboration with the Joint Venture Partner. Following the analysis of wireline log results, two Drill Stem Tests (DSTs) were conducted in the Lower Goru Formation, targeting the Massive Sand and Basal Sand intervals. The cumulative test results indicated the production of 6.4 million standard cubic feet of gas per day (MMSCFD) and 55 barrels per day (BPD) of condensate through a 32/64' choke. This discovery marks a significant milestone in the Bitrisim Exploration Licence, highlighting the potential of the Lower Goru Formation (Basal and Massive Sands). The discovery significantly enhances the block's commercial viability and extends the licence's productive life. Copyright Business Recorder, 2025
Express Tribune
5 days ago
- Business
- Express Tribune
Hydrocarbon reserves discovered in Khairpur
Listen to article Oil & Gas Development Company Limited (OGDCL) announced a significant oil and gas discovery at the Faakir-1 well within the Bitrisim Exploration License in Khairpur, Sindh. As per a statement, OGDCL operates the well with a 95% working interest. The exploratory well was spudded on December 31, 2024, and drilled to a depth of 4,185 metres in the Sembar Formation. Post-drilling analysis included two Drill Stem Tests (DSTs) in the Lower Goru Formation, targeting the Massive and Basal Sand intervals. These tests showed a cumulative production of 6.4 million standard cubic feet of gas per day (mmscfd) and 55 barrels of condensate per day.
Business Recorder
5 days ago
- Business
- Business Recorder
OGDCL finds significant gas reserves in Sindh
Oil & Gas Development Company Limited (OGDCL), along with its partner Government Holdings (Private) Limited (GHPL), has successfully discovered natural gas and condensate reserves at an exploratory well named Faakir-1, located in Khairpur district, Sindh. OGDCL, one of Pakistan's largest E&P companies, disclosed the development in its notice to the Pakistan Stock Exchange (PSX) on Thursday. 'We are pleased to announce a gas and condensate discovery from the exploratory well Faakir-1, located within Bitrisim Exploration Licence in Khairpur district, Sindh,' read the notice. The well is operated by OGDCL, holding a 95% working interest, in joint venture with GHPL, which holds the remaining 5% interest. 'Faakir-1 was spudded on December 31, 2024, as an exploratory well and drilled to a total depth of 4,185 meters in the Sembar Formation. The well was drilled using OGDCL's in-house expertise in close collaboration with the joint venture partner,' stated OGDCL. The listed company shared that based on the interpretation of wireline log results, two Drill Stem Tests (DSTs) were carried out in the Lower Goru Formation, targeting the massive sand and basal sand intervals. 'The cumulative test results indicated a production of 6.4 million standard cubic feet of gas per day (MMSCFD) and 55 barrels per day (BPD) of condensate through a 32/64' choke,' it shared. The company was of the view that the said discovery marks a significant breakthrough in the Bitrisim Exploration Licence from Lower Goru Formation, thereby enhancing the commercial prospectivity and extending the life of the licence. 'This discovery is expected to contribute meaningfully toward reducing the energy demand-supply gap through indigenous resources and will also add to the hydrocarbon reserves base of both OGDCL and the country,' it added. Last year, OGDCL discovered natural gas reserves at Shahu-1 well located in the district of Khairpur, Sindh.
Yahoo
03-06-2025
- Business
- Yahoo
How the latest US tax bill increases uncertainty for foreign businesses
The US' latest tax bill, officially named the One Big Beautiful Bill Act, contains a section that could drastically change the business environment for foreign companies and investors in the US. Section 899 says that the US could increase taxes on foreign investments (such as subsidiaries from non-US multinationals) if these come from countries that the US deems to have unfair trade policies. House Ways and Means Committee chair and Missouri Representative Jason Smith told Axios: 'This is a way to help put them in check, so that they understand that if they do that to our businesses, there will be consequences for their actions. Hopefully it will never take effect.' Under this provision, foreign companies operating in the US, US companies with foreign owners, multinationals and individual foreign investors from "discriminatory foreign countries" could face higher US taxes. This would enable the government to retaliate against countries that have imposed digital services taxes (DSTs) on US tech companies by targeting foreign investments from these countries in the US. It comes a few months after US Vice-President JD Vance visited France for the AI Summit, where he warned Europe against increasing tech regulations. US President Donald Trump has also criticised antitrust and privacy cases being pursued by the EU against big tech companies. Already, the US' dizzying tariff regime was hurting foreign investor confidence in the US. Delegates at the SelectUSA Investment Summit told Investment Monitor that many foreign businesses were delaying plans until they could have a more certain outlook. 'The measure risks detonating investor confidence and could set off a damaging pullback of foreign capital just as the US needs it the most,' Nigel Green, deVere Group's CEO, tells Investment Monitor in a note. 'It punishes the very people whose capital keeps American businesses growing, whose investments fund US debt and whose companies are employing millions of US workers.' 'Other countries won't sit idle while their firms and funds are penalised. They will respond. This means potential tax retaliation, trade frictions and further fragmentation of an already fragile global economic order,' Green says. He also emphasised that US workers would suffer the most severe consequences from this law if it came into effect. Ashley Akin, a tax consultant at RKO Tax and former KPMG manager, tells Investment Monitor over email that this provision 'introduces a real pricing risk for foreign investors and multinational firms'. 'If a country enforces digital taxes that the US finds discriminatory, their businesses operating in the US can face extra taxes starting at 5%, climbing up to 20%. These surcharges can override tax treaties,' Akin outlines. 'Companies doing everything by the book could still get hit, purely because of the tax policy in their home country." Already, the Trump administration has suggested that countries regulating US tech companies abroad could provoke more tariffs. These threats were seemingly aimed at Europe, where regulators have begun cracking down on major tech companies for what they view as privacy breaches and anti-competitive behaviour. Trump's senior trade adviser, Peter Navarro, has accused the EU of using "lawfare [...] to target America's largest tech firms". 'Section 899 is designed to protect US tech giants from what Washington views as targeted digital taxes. It gives the US leverage to push back against European digital services taxes, and it can help these companies negotiate better terms abroad,' Akin says. There is, she adds, a risk of backlash. 'If European countries respond with their own countermeasures, we could see a patchwork of retaliatory rules. That would just create more friction for everyone, not just tech. It is not a clean win [for US tech companies], but it does shift the power dynamic back towards the US,' she notes. The One Big Beautiful Bill passed in the House with 215 votes for and 214 against. Two Republicans joined Democrats in opposing it. It will now be debated in the Senate, where officials will have the opportunity to amend provisions. "How the latest US tax bill increases uncertainty for foreign businesses" was originally created and published by Investment Monitor, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
