Update – June 27, 2025 – The 899 Penalty Tax has been removed from the “Big Beautiful Bill”:
Update – June 22, 2025:
The Senate version of the Big Beautiful has been released. The full text is here:
https://www.finance.senate.gov/imo/media/doc/finance_committee_legislative_text_title_vii.pdf
In general, the Senate version retains the substance and principles of the House version.
The Senate version begins on page 138.
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Attention (At Least) Residents Of Countries With DSTs (“Digital Services Tax):
The Trump administration’s “Big Beautiful Bill” includes a provision to impose punitive taxes on nonresident aliens, with U.S. source income, who are residents of countries that have “Digital Services Taxes” (and other taxes applying to U.S. persons that they deem to be unfair).
This is “pretty rich” coming from the one country in the world that through it’s “citizenship tax” regime imposes taxation on the non-U.S. source income of received by people who don’t live in the United States!
At present the following countries (including Canada) impose DSTs. Note that the imposition of certain kinds of taxes (in addition to DSTs) may subject individual nonresident aliens to punitive taxation.
Generally, the law would impose, in addition to the existing U.S. tax, an additional tax, ranging from an additional 5% to an additional 20%.
Bottom Line:
Nonresident aliens who hold U.S. securities, U.S. real estate or have income that is effectively connected to the United States (“ECI”) may want to consider liquidating these investments.
My initial reaction and analysis suggests that Canadian residents will be particularly impacted by this measure. I will update this post as necessary and appropriate. Nevertheless:
“To Be FORMWarned Is To Be FORMArmed!”
This will not effect immediately. You have time to ponder this and understand it. This will not take effect immediately.
To understand the reasons, tax and general methodology for this conclusion, read on …