News

Section 899: Retaliatory Tax Power in Bill Raising Concerns

June 3, 2025

Real estate market participants and other industries with a global investor base are raising concerns about a provision that would expand Treasury’s authority to impose retaliatory taxes on foreign direct investment in the U.S.

Why it matters: The One Big Beautiful Bill contains a provision—Section 899—that would allow Treasury to impose annual tax increases of 5% on any foreign individual, government, corporation, trust, foundations, etc. in response to unfair tax treatment against the U.S. The increases are capped at 20%, which is in addition to any existing tax the entity pays. 

What they’re saying: Chairman Jason Smith (R-MO), the House’s chief tax writer and the provision’s author, was quoted in Axios defending the measure:  

A big concern is that foreign governments, based on agreements entered into by the Biden administration, is trying to suck away billions of dollars from U.S. companies … 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'll never take effect.
A CNBC article quoted several investment bank research analysts criticizing the provision. 
 
 
“We see this legislation as creating the scope for the U.S. administration to transform a trade war into a capital war if it so wishes.” -George Saravelos, global head of FX research at Deutsche Bank
Go deeper: According to the Ways and Means Committee section-by-section summary:
 
  • The provision responds to unfair taxes by increasing the rate of tax generally applicable to certain taxpayers connected to the foreign jurisdiction.
  • Affected taxpayers generally include the foreign government, resident individuals, resident corporations, resident foreign private foundations, and entities owned by such persons.
  • The increases apply to certain income, withholding, and excise taxes imposed on non-residents.
  • The rate of tax-imposed increases from the rates otherwise applicable under current law in 5% increments for each year the unfair tax is imposed, until either the unfair tax is removed or the tax reaches a maximum amount equal to the relevant statutory rate plus 20%.
What’s next: The provision will be further scrutinized as the Senate begins its consideration of the reconciliation bill this week. CREFC will continue to work with its industry partners to address any concerns related to CRE and multifamily finance.
 
Contact David McCarthy (dmccarthy@crefc.org) with any questions.
 

Contact  

David McCarthy
Managing Director,
Chief Lobbyist, Head of Legislative Affairs
202.448.0855
dmccarthy@crefc.org
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2025 CRE Finance Council. All rights reserved.

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