The second Trump administration has made numerous announcements on trade and tariffs, but US tax policy is increasingly woven into the discussion on international trade. This includes the possibility of retaliatory US action against “discriminatory or extraterritorial taxes” imposed by other countries.
The US House Budget Reconciliation Bill, officially titled the “One Big Beautiful Bill Act", was recently passed by the House of Representatives and includes retaliatory US tax measures in response to “unfair foreign taxes” - with digital services taxes (DSTs) and the undertaxed profits rule (UTPR) of the Pillar 2 global minimum tax regime expressly identified as falling in this category.
In our latest podcast US tax expert Claude Stansbury, UK tax expert Emily Szasz and international trade expert Lorand Bartels join Josh Critchlow to discuss the latest on this intersection of US tax and trade policy, including:
- details of the measures in new proposed section 899 of the US tax code (including increased withholding tax rates), the impact the measures could have on multinational groups with US operations, the interaction of section 899 with double tax treaties, and when these measures could take effect;
- a deeper dive into the taxes considered to be "unfair foreign taxes" and which countries may be in-scope of proposed section 899;
- previous use of US trade measures in response to tax rules imposed by other countries and how the proposed retaliatory tax measures fit into the rapidly evolving international trade landscape; and
- possible next steps, including:
- what actions may be taken at an OECD/EU level to address US concerns in respect of the identified "unfair" taxes; and
- whether proposed section 899 could itself be subject to challenge under trade laws.
Note: this podcast was recorded on 30 May 2025 and does not cover developments after this date.
The UK Chancellor of the Exchequer, Rachel Reeves, has delivered the Autumn Budget 2024.
In the first Budget presented by the Labour Party since 2010, Reeves announced an extensive array of tax reforms designed to 'stabilise' public finances and facilitate increased government spending. Altogether, tax rises totalling £40 billion were announced - some expected, others less so.
In our latest podcast Peter Clements, Sarah Bond, Rose Swaffield, Josh Critchlow and Chris Gotch from our London tax team discuss the business tax measures they found most noteworthy in the Autumn Budget 2024, including:
- Headline Budget announcements, including:
- increases in the capital gains tax (CGT) main rates and reforms to business asset disposal relief and investors' relief, accompanied by anti-forestalling measures;
- an increase in employer National Insurance contributions by 1.2% from April 2025; and
- an increase in the CGT rates for carried interest from April 2025, with more significant reforms expected to follow;
- Publication of the Corporate Tax Roadmap designed to provide stability for businesses and foster inward investment, including:
- capping the headline UK corporation tax rate at 25%;
- confirmation the permanent 'full expensing' capital allowance regime and existing R&D reliefs will be retained; and
- plans to provide increased tax certainty to investors in major projects;
- Measures designed to 'close the tax gap', including:
- an increase in the interest rate for unpaid tax;
- targeted anti-avoidance measures applying with immediate effect; and
- the recruitment of additional HMRC compliance and debt management staff; and
- Other changes to the UK's tax code, including:
- confirmation the UK will introduce the Pillar Two undertaxed profits rule (the 'UTPR') for accounting periods from January 2025, along with the related repeal of the offshore receipts in respect of intangible property (or 'ORIP') rules;
- the replacement of the remittance basis of taxation for non-UK domiciled individuals ('non-doms') with a new residence-based regime; and
- confirmation of increases to the rate and duration of the Energy Profits Levy and the removal of the associated investment allowance.
