
The One Big Beautiful Bill Act approved by the House of Representatives last week would raise tax rates on foreign governments, firms, partnerships and individuals from any foreign country that imposes “unfair foreign taxes.”
Proposed Section 899

- The so-called section 899 “retaliatory tax measures” legislation was a significant topic at this week’s Real Estate Roundtable Tax Policy Advisory Committee (TPAC) meeting. A discussion of the legislation was led by Baker McKenzie partner Alexandra Minkovich. (Proposed Section 899 Presentation)
- Unfair foreign taxes are broadly defined in the legislation to include digital services taxes, diverted profits taxes, and certain tax rules adopted by countries pursuant to OECD model rules for taxing multinational businesses (“Pillar 2”), as well as taxes that the Treasury Secretary determines are extraterritorial, discriminatory, or intended to be born disproportionately by US persons.
- The legislation would raise the applicable treaty or non-treaty tax rate by 5%/year, up to the maximum statutory tax rate plus 20%.  (WSJ, May 30)
- Countries or regions widely considered targets of the legislation because of their adoption of either digital services taxes or Pillar 2 undertaxed profits rules include the U.K., Canada, the E.U., Australia, and Japan.Â
Implications for CRE

- If enacted, the legislation could have implications for U.S. real estate because of its application to sovereign wealth funds, foreign insurance companies, and passive investors that provide an important source of equity investment for large-scale, capital-intensive U.S. real estate and infrastructure projects. It could have a chilling effect on inbound investment decisions.
- According to CBRE, foreign investment in U.S. real estate increased by 40 percent between the second half of 2023 and the second half of 2024. (CBRE, March 2025)
- Chye-Ching Huang with the NYU Tax Law Center recently told the New York Times that the legislation would “create a new front in the U.S. tariff war with its closest economic partners, extending that to taxes and investment.” (New York Times, May 21)
- The provisions in the House bill draw heavily from legislation introduced by House Ways and Means Chairman Jason Smith (R-MO). They are estimated to raise $116 billion over 10 years. It is unclear whether they have the full support of key Senators. Also, because they implicate foreign relations and treaty commitments, they could face parliamentary challenges under Senate rules.
At the TPAC meeting this week, Committee Chair Josh Parker (Chairman & CEO, Ancora Group Capital), announced the formation of a working group to analyze the legislation’s impact on real estate and ensure policymakers fully understand the potential unintended consequences of the bill.