Fund managers are lobbying Congress over Section 899, a provision in President Donald Trump’s tax bill that could lead to foreign investors quickly pulling investments out of the US. The Investment Company Institute (ICI) warns that the current draft of the bill would impact most foreign investments in US stock markets.
The ICI is seeking an amendment to protect US fund managers and prevent capital outflows from the US. Section 899 aims to introduce retaliatory tax measures against entities from countries with unfair foreign taxes, starting at 5% and escalating by five percentage points annually. If signed into law, it could affect investors from the European Union, UK, Canada, Australia, and Switzerland.
The ICI suggests that the current drafting of proposed Section 899 should clarify its scope to avoid discouraging foreign investment in US equity markets through investment funds. Foreign investors own over $19 trillion in the US stock markets, $7 trillion in US government bonds, and $5 trillion in US credit.
Tax experts say earnings paid out to foreign investors are more likely to be hit by Section 899 than capital gains. Fund managers are concerned that a withdrawal by foreign investors could lead to lower earnings for investment management firms.
Source: https://www.cnbc.com/2025/06/10/fund-managers-lobby-congress-on-section-899-to-avert-foreign-investors-exit.html