Australian superannuation funds have been spared a multi-billion dollar hit after Treasury Secretary Scott Bessent announced the US would drop a so-called “revenge tax” on foreign investors.
The super industry had been ringing alarm bells over section 899 of President Donald Trump’s proposed big beautiful bill, which would have raised taxes by up to 15 percentage points on foreign entities in retaliation to “unfair taxes” other countries had imposed on US companies.
But Mr Bessent revealed the section would be removed from the bill in a social media post early on Friday, after a deal was reached with G7 nations allowing the US to back out of a global minimum tax rate.
“After months of productive dialogue with other countries on the OECD Global Tax Deal, we will announce a joint understanding among G7 countries that defends American interests,” he wrote on X.
“OECD Pillar 2 taxes will not apply to U.S. companies, and we will work cooperatively to implement this agreement across the OECD-G20 Inclusive Framework in coming weeks and months.
“Based on this progress and understanding, I have asked the Senate and House to remove the Section 899 protective measure from consideration in the One, Big, Beautiful Bill.”
The announcement was met with a sigh of relief from the $4.2 trillion Australian superannuation industry, which would have been particularly exposed to the tax, given it holds more than $600 billion worth of US assets.
Modelling conducted for the Association of Superannuation Funds of Australia by consulting firm Mandala found it could have cut $3.5 billion from returns over the first four years.
Treasurer Jim Chalmers raised Australia’s concerns about the tax during a phone call with Mr Bessent on Wednesday, when he told reporters he was hopeful of positive development in the coming days.
“We do not want to see our investors and our funds unfairly treated or disadvantaged when it comes to developments out of the US Congress,” he said.
“And once again, I’m very grateful to Scott Bessent for hearing me out and for also undertaking to make what progress he can to try and resolve these issues.
“I’m confident he understands these issues.”
In a speech in June, Future Fund chair Greg Combet said US investments were a less attractive proposition for the sovereign wealth fund, in part because of the proposed tax hike contained in Mr Trump’s “big beautiful bill”.
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