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Treasury Secretary Scott Bessent told congressional taxwriters last week that while he sees the implementation of the Pillar 2 side-by-side agreement for the U.S. within global minimum tax negotiations as going well, the U.S. Treasury has “the tools necessary” if the agreement falls apart.
“I believe that we have the tools necessary, that if our sovereignty is not respected, to counteract any failures to enact this, and I believe this is important because with this, the money comes into the U.S. Treasury rather than foreign treasuries,” Bessent said during June 4 testimony before the House Ways and Means Committee.
However, Bessent gave a positive progress report on the global minimum tax side-by-side deal, negotiated within the Organisation for Economic Co-Operation and Development (OECD) Inclusive Framework.
“We’re finding very good partnership and we’re implementing it via our partnership with the OECD and our constant interaction with them,” he said.
Before other countries agreed to the side-by-side deal, which exempts U.S. multinationals from certain top-up taxes in other countries, Treasury had pushed for a new retaliatory tax known as Section 899 — the section of the Internal Revenue Code it would have created — to be part of the One Big Beautiful Bill Act. Both the House and Senate included versions of the provision in their initial drafts of the tax bill but dropped it when the G7 countries committed to a safe harbor for U.S. firms.
While Bessent signaled that the side-by-side implementation remains copacetic from the Trump administration’s viewpoint, he took aim during the same hearing at digital services taxes (DSTs) that initially drew the U.S. to the OECD global tax negotiations and remain in effect or under consideration in several countries.
“We are pushing, whether it’s Europe, whether it’s Turkey, whether it’s Brazil, whether it’s India, whether it is Canada, we are pushing back on these digital services taxes,” Bessent said, when asked about a Canadian DST, which was rescinded in March after pressure from the U.S. during trade negotiations.
Canada had passed a fee on streaming services that would have affected large U.S. media companies, directing foreign streaming companies that make more than C$25 million (about $18 million) in Canada to direct 15% of their revenues towards supporting Canadian and Indigenous content. But on June 3 Prime Minister Mark Carney directed a rewrite of the rule related to the Online Streaming Act. In an interview with Politico he denied this was a result of ongoing trade negotiations with the U.S.
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