Proposed Section 899 of the U.S. Internal Revenue Code, introduced as part of the "Defending American Jobs and Investment Act" within the "One Big Beautiful Bill Act" (H.R. 1), is a significant international tax provision aimed at countering foreign tax regimes deemed unfair to U.S. businesses and individuals. Here's a concise overview based on available information:

Key Points of Proposed Section 899:

Purpose:

Titled "Enforcement of Remedies Against Unfair Foreign Taxes," Section 899 is designed to retaliate against foreign countries imposing taxes considered discriminatory or extraterritorial, such as Digital Services Taxes (DSTs), Undertaxed Profits Rules (UTPRs) under OECD’s Pillar Two, and Diverted Profits Taxes (DPTs). These taxes are seen as disproportionately targeting U.S. companies, particularly tech giants like Google, Amazon, and Apple.



Mechanism:

Tax Increases: The provision would increase U.S. tax rates on certain income earned by "applicable persons" from "discriminatory foreign countries" by 5 percentage points annually, up to a maximum of 20 percentage points above the standard rate. This applies to:U.S.-source fixed, determinable, annual, or periodical (FDAP) income (e.g., dividends, interest, royalties) subject to withholding tax.Income effectively connected with a U.S. trade or business (ECI), including gains from U.S. real property under FIRPTA for individuals.Branch profits taxes for foreign corporations.



Base Erosion and Anti-Abuse Tax (BEAT):

Modifies BEAT rules for U.S. corporations primarily owned by residents of discriminatory foreign countries, treating gross receipts and base-eroding payment tests as met, and eliminating certain exemptions.

Section 892 Exemption: Denies tax exemptions under Section 892 for foreign governments and their entities (e.g., sovereign wealth funds) from discriminatory foreign countries, subjecting their U.S.-source investment income to taxation.



Discriminatory Foreign Country:
A country is labeled "discriminatory" if it imposes:DSTs, UTPRs, DPTs, or other taxes deemed unfair by the Treasury, particularly those targeting U.S. persons disproportionately.

Taxes not based on net income, predominantly affecting nonresidents, or not recognized as income taxes under foreign law or tax treaties.Countries like Canada, France, Austria, and the UK, which have DSTs or UTPRs, are automatically considered discriminatory without requiring Treasury discretion.



Effective Date:
If enacted, the provision would apply to tax years beginning after the later of:90 days after enactment.
180 days after a foreign country enacts an unfair tax (if enacted after Section 899).The effective date of the foreign tax, if later than 180 days after its enactment.Withholding agents have transitional relief from penalties until December 31, 2026, if they act in good faith to comply.



Legislative Status:
House Approval: Passed by the House of Representatives on May 22, 2025, as part of the "One Big Beautiful Bill Act."

Senate Consideration: The bill awaits Senate approval, where modifications are possible, particularly to address treaty override concerns or Byrd Rule compliance in reconciliation.

Target Enactment: Republicans aim for enactment by July 4, 2025.


Malaysia’s Tax Landscape:

Digital Services Tax (DST):
Malaysia has a 6% Service Tax on Digital Services (effective January 1, 2020), applicable to foreign digital service providers (e.g., Netflix, Google, Meta) supplying services to Malaysian consumers. This tax resembles DSTs in other countries, as it targets digital revenue without regard to physical presence.

Relevance to Section 899:
Malaysia’s DST could be classified as a "discriminatory foreign tax" if the U.S. Treasury determines it disproportionately targets U.S.-based tech companies. Many DSTs globally (e.g., in France, Canada) are viewed as targeting U.S. firms, and Malaysia’s tax may fall under similar scrutiny, especially given its application to foreign providers.


OECD Pillar Two and UTPR:
Malaysia has expressed intent to align with the OECD’s Pillar Two framework, which includes a 15% global minimum tax and the Undertaxed Profits Rule (UTPR). As of June 2025, Malaysia has not fully implemented Pillar Two, but draft legislation or commitments to adopt UTPR could trigger Section 899.

Relevance to Section 899: If Malaysia enacts a UTPR, it would automatically be considered a discriminatory tax under Section 899, as UTPRs are explicitly listed as qualifying taxes.






Tldr; your 30% tax will be bumped to 50% on your dividends if we are designated a discriminatory foreign country.

Sos : Grok

time to sell

Don't spread false news
Section 899 dropped lah
https://apnews.com/article/trump-revenge-ta...26ed743c97539ab

Has the orange man thrown another tantrum yet?