Latest news with #foreigninvestment
Forbes
a day ago
- Business
- Forbes
Proposed Section 899 Of Big Beautiful Bill Challenges Global Investors
T WASHINGTON, DC - MAY 22: U.S. Speaker of the House Mike Johnson (R-LA) speaks to the media after the ... More House narrowly passed a bill forwarding President Donald Trump's agenda at the U.S. Capitol on May 22, 2025 in Washington, DC. The tax and spending legislation, in what has been called the "One, Big, Beautiful Bill" Act, redirects money to the military and border security and includes cuts to Medicaid, education and other domestic programs. Johnson was flanked by House Committee Chairmen who helped craft the legislation. (Photo by) he United States has been a major destination for foreign direct investment for years. In 2022, foreign firms invested over $177 billion in the country. In May 2025, the U.S. House of Representatives passed the One Big Beautiful Bill Tax Act (OBB). Beyond the potential impact on foreign direct investment in the U.S. overall, certain provision of the OBB may have a broader impact, especially affecting common asset protection and wealth planning strategies. The increased rate on withholding, investments, corporate holdings, and more, is designed as a retaliatory measure on taxes, especially digital taxes, imposed by other countries which the U.S. describes as discriminatory foreign countries. The broader application of Section 899 would create additional reporting obligations, complicate foreign asset protection trust holdings, and subject investors to penalties and taxes that were previously unexpected. Foreign individuals or entities that own at least 25% of a U.S. corporation or foreign corporations engaged in a trade or business in the U.S. are subject to reporting requirements under Internal Revenue Code (IRC) Section 6038A. The IRS requires filing Form 5472 to disclose transactions between the implicated corporations and its holders accordingly. Failure to file Form 5472 accurately and timely can result in significant and repeated penalties of $25,000 in each instance and more. Corporations may be subject to the filing requirement regardless of its level of activity. Oftentimes, U.S. investments, whether in real estate, private equity, intellectual property, or otherwise, are held in U.S. Corporations and foreign asset protection vehicles are used in conjunction with such entities to further tax-efficiency, privacy, and creditor protection. These layered wealth protection structures may face additional tax burdens if proposed Section 899 becomes final. Foreign asset protection trusts (FAPTs) often hold U.S. entities with U.S. investments. This structure presents additional challenges with compliance and reporting. Unless structured otherwise, the transfer of assets by a U.S. person to a foreign trust is treated as a grantor trust where the U.S. person is taxed on the trust's income. Distributions by the foreign trust, especially to U.S. beneficiaries subjects the beneficiaries to tax also and additional foreign trust reporting requirements, including filing Forms 3520 and 3520-A. Substantial penalties of $10,000 or 35% of the gross value of any property transferred to the foreign trust, and more may apply for noncompliance. Wealth planning incorporating ownership and transfer of business interests to multinational beneficiaries, and investors abroad or considered foreigners even if located in the U.S. may be impacted by the legislation. The underlying investment in U.S. companies or assets where potential beneficiaries or other investors may be foreign and from the list of discriminatory countries would be subject to the additional tax rates that range from 5% to 20%. Restructuring investments and ownerships to mitigate any potential tax exposure in light of proposed Section 899 would be prudent. Additionally, in conjunction with enforcing the increased rates and compliance obligations under proposed Section 899, increased enforcement of penalties for noncompliance on foreign trust reporting and foreign corporate holdings can be expected if Section 899 is passed and impacted taxpayers would be prudent in ensuring that all prior reporting obligations have been met. For foreign investors and global families with U.S. investments and connections, ensuring comprehensive review of their existing investment and asset protection structures along with ensuring full compliance with U.S. tax reporting requirements is critical. Proactively filing any required returns that may have been inadvertently delayed or omitted will start applicable statutes of limitations on audits and provide potential relief from some penalties where a reasonable cause of noncompliance failure exists. Additionally, preparing for potential legislative changes, including the implementation of proposed Section 899 by restructuring investments, ownerships, and transfers, can prevent additional tax exposure before it is too late.
Times of Oman
2 days ago
- Business
- Times of Oman
OIA's role in supporting development of local economy in Oman lauded
New York: A new report by the SWF Global commended Oman Investment Authority (OIA) for strengthening Oman's global ties through targeted foreign investments, joint funds, and reinvesting divestment proceeds and returns into national projects. This approach sets OIA apart from its peers, as it adopts a unique philosophy centered on the "Omani Angle" making it a foundational principle in its investment decision-making. SWF Global is a specialized organisation that focuses on tracking activities of state-owned investment organizations, including sovereign wealth funds, central banks, and pension funds worldwide. The report highlighted OIA's success in building an extensive network of strategic relationships by promoting the concept of economic diplomacy with various countries across the Middle East, Asia, North Africa, Europe, and the Americas over the past five years. Among the most recent strategic partnerships is the signing of a joint fund agreement with Algeria worth USD 300 million, targeting investments in vital sectors such as mining, food security, and pharmaceuticals. Additionally, OIA partnered with Turkey's OYAK Fund to establish a joint investment fund valued at USD 500 million and launched a joint fund with Uzbekistan, which focuses on establishing a university in Tashkent in collaboration with Arizona State University of USA. Furthermore, OIA has invested in the Vietnam-Oman Investment Company, which has allocated nearly USD 400 million to projects in solar energy, infrastructure, healthcare, education, and food. The report also noted that OIA's focus is not limited to establishing strategic partnerships through joint investment funds alone, but also extends to direct investments in global companies, which primarily aim to localize advanced global technologies in the Sultanate of Oman, in addition to generating returns that are later reinvested into local projects. Notable examples include OIA's stake in Elon Musk's artificial intelligence firm 'xAI, in addition to 'Tidal Vision', a US-based company offering cutting-edge technological solutions to address pollution and climate-related challenges in the agriculture and water sectors. In the technology sector, OIA partnered with 'Golden Gate Ventures' of Singapore to establish a USD 100 million joint fund, leading to establish a local venture office in Muscat to manage joint investments between the two countries, and investing in local companies like 'Bayanat'. Collectively, these efforts underscores OIA's commitment to embedding the Omani angle across all its investments and partnerships. Moreover, the report highlighted OIA's policy to carry out strategic divestments from certain government assets, which contributed to revitalizing the Muscat Stock Exchange. Among the most notable of these divestments was the initial public offering (IPO) of 25% of 'OQ Exploration & Production' shares in October 2024, which marked the largest IPO in the history of the Sultanate of Oman. The offering aimed to strengthen foreign investor confidence in the Omani market while also involving citizens in the transformational shift of Oman's economy, in which OIA plays a central role. The report further noted that since mid-2022, OIA has successfully divested from 19 assets, generating returns exceeding RO 2.7 billion. These included public offerings such as 'The Pearl REIF', 'Abraj Energy Services' and 'OQ Gas Networks', all of which witnessed demand surpassing the supply. These IPOs are not only about generating financial returns; they are also intended to inject liquidity into Oman's financial markets, attract long-term foreign investment, and pave the way for future divestments. Locally, the report discussed OIA's efforts to strengthen its investments in the national economy through the National Development Fund (NDF), noting that total capital investment spending in local projects rose to RO 1.9 billion, surpassing the initial target of RO 1.7 billion. The report stated that the NDF represents 60% of the assets managed by OIA, and its investments are aimed at supporting the objectives of Oman Vision 2040. Additionally, OIA established Future Fund Oman (FFO) with a capital of OMR2 billion, of which 90% is allocated to large direct investments in viable local projects, and 10% to small, medium, and emerging enterprises- with the latter portion exceeding US$519 million. The Fund focuses on sectors such as green energy, industry, and tourism to support the diversification of the Omani economy. FFO has witnessed strong interest in its first year, attracting investments worth more than US$ 2 billion, 70% of which came from foreign investors, across ten priority sectors, including artificial intelligence, fintech, clean energy, and ICT. This approach has distinguished OIA from its regional counterparts, where investment strategies are predominantly focused on the oil and real estate sectors. The SWF Global concluded its analysis by noting that the dual role played by OIA in strengthening Oman's strategic partnerships while simultaneously advancing the national economy positions it to lay the foundation for Oman's future economy. This is achieved through the establishment of joint funds, localization of advanced global technologies, execution of a strategic divestment plan, and attraction of foreign direct investment. These efforts make OIA a model for transforming Gulf economies toward sustainable development and economic diversification.
Wall Street Journal
3 days ago
- Business
- Wall Street Journal
A New ‘Revenge Tax' Aimed at Foreign Investors Is Rattling Wall Street
A retaliatory measure on foreign governments tucked into President Trump's tax bill has investors on edge. The proposed change would give the U.S. power to impose new taxes of up to 20% on foreigners with U.S. investments, hitting governments, individuals and companies with U.S. outposts. It's being called a 'revenge tax' because it's specifically designed to apply only in cases where other countries are deemed to be imposing unfair or discriminatory taxes against U.S. companies.
Bloomberg
3 days ago
- Business
- Bloomberg
Key Republican Hopes ‘Revenge' Tax Will Be a Never-Used Deterrent
A key House Republican tax negotiator said he hopes the so-called 'revenge' measure in President Donald Trump's tax and spending bill targeting foreign investors will be a deterrent that is never deployed. House Ways and Means Committee Chair Jason Smith on Friday defended the provision, called Section 899, which calls for increasing income tax rates on foreign individuals and companies from countries whose tax policies the US deems 'discriminatory.'
Irish Times
3 days ago
- Business
- Irish Times
Foreign tax provision in Trump budget bill spooks Wall Street
Wall Street is warning that a little-publicised provision in US President Donald Trump's budget bill that allows the government to raise taxes on foreign investments in the US could upend markets and hit American industry. Section 899 of the bill that the House of Representatives passed last week would allow the US to impose additional taxes on companies and investors from countries that it deems to have punitive tax policies. Investors, US companies with foreign owners and international firms with American branches could all be affected, potentially chilling corporate investment and fuelling a retreat from US assets. This retreat, hastened by the Trump administration's tariff policies, comes as the US is more dependent than ever on foreign investors to buy its growing stock of government debt. READ MORE 'This is a market-spooking event, hitting already fragile confidence, particularly from foreign investors,' said Greg Peters, co-chief investment officer at PGIM Fixed Income. 'It's all self-inflicted wounds at a time when you have a lot of debt that needs to get financed here. So the timing is really quite poor.' Ford Chief Lisa Brankin on accelerating the switch to EVs Listen | 41:35 A senior executive at a major Wall Street bank said: 'This is one of the more worrisome ideas to have come out of DC this year. If it goes forward, it will definitely cool foreign investment in the US.' Morgan Stanley analysts said Section 899 would probably put pressure on the dollar, adding that it 'disincentivises foreign investment', while JPMorgan noted that it had 'significant implications for both US and foreign corporations'. [ US-China trade talks 'stalled', says Scott Bessent Opens in new window ] The measure targets countries with what the US calls 'unfair foreign taxes'. Most European Union countries, the UK, Australia, Canada and others around the world would be affected, according to law firm Davis Polk. For foreign investors, Section 899 would increase taxes on dividends and interest on US stocks and some corporate bonds by 5 percentage points every year for four years. It would also impose taxes on the American portfolio holdings of sovereign wealth funds, which are at present exempt. 'The long-term implications [are] going to be quite severe for international companies operating in the United States,' said Jonathan Samford, president of the Global Business Alliance, a trade group representing the largest foreign multinationals investing in the US. 'This provision is not going to impact bureaucrats in Paris or London. It's going to impact American workers in Paris, Kentucky, and London, Ohio.' Tim Adams, chief executive of the Institute of International Finance, which represents 400 of the world's biggest banks and financial institutions, said that 'at a time when the administration is actively seeking foreign investment in the US to support job creation, capital formation and reshoring of manufacturing capability, this could be counter-productive'. Mr Adams added: 'Any disruption to the flow of capital and foreign direct investment could have negative unintended consequences for American companies, jobs and economic competitiveness.' While foreign investors in US stocks and some corporate bonds may face higher taxes, it is unclear whether that tax would extend to treasury debt, according to several analysts and investors. Interest earned on treasuries is usually tax-exempt for investors based outside the US, and making that taxable would represent an enormous change from current policy. 'Section 899 is legally ambiguous regarding a potential tax on treasuries ,' said Lewis Alexander, chief economic strategist at hedge fund Rokos Capital Management. 'Taxing treasuries could be counterproductive as any potential revenues likely would be outweighed by a resulting increase in borrowing costs [as investors sell the debt].' But even if treasuries were not directly taxed, Section 899 would represent another concern for international holders of US debt when many are wary of the country's gaping deficit and vacillating tariff policies. 'Our foreign clients are calling us panicked about this,' said a managing director at a large US bond fund. 'It's not totally clear whether treasury holdings will be taxed, but our foreign investors are currently assuming they will be.' – Copyright The Financial Times Limited 2025
