/>iOn June 16, 2025, the Senate Finance Committee released its own version (Senate Version) of the tax provisions of H.R. 1, entitled the “One Big Beautiful Bill Act,” which the U.S. House of Representatives passed on May 22, 2025.
The Senate Version introduces several important changes and clarifications to the proposed new Section 899 of the Internal Revenue Code (Code), “Enforcement of Remedies Against Unfair Foreign Taxes” that was included in the bill that was passed by the House (commonly referred to as the Revenge Tax). If enacted as proposed in the Senate Version, Section 899 would increase by up to 15 percentage points a range of U.S. federal tax rates, including both U.S. withholding tax rates (such as those on interest, dividends, and other fixed or determinable annual or periodical income paid to foreign persons) and certain other U.S. income tax rates (such as the regular tax rates applicable to nonresident individuals and foreign corporations, branch profits tax, and tax on private foundations), on income derived by taxpayers who are resident in, or otherwise connected to, jurisdictions the U.S. government designates as “offending foreign countries.”
The Senate Version includes a specific exception from the tax increase under Section 899 for “portfolio interest,” as well as a cap of 15% on the additional tax under Section 899 (as opposed to 20% cap the House proposed, determined without regard to any rate applicable in lieu of the statutory rate). The Senate Version also delays the implementation of the proposed Section 899, generally until Jan. 1, 2027 (compared to the effective date of Jan. 1, 2026, under the House version).
This GT Alert summarizes the most significant substantive changes and explains their potential impact.
