United States of America: Budget reconciliation Bill was adopted without measures aimed at addressing digital services taxes considered discriminatory

On 3 July 2025, the Budget Reconciliation Bill was adopted following the House of Representatives' motion agreeing to the Senate amendments. The Bill had previously included measures to address digital services taxes considered discriminatory. It introduced provisions addressing such taxes by defining "discriminatory tax" in Section 899(d)(4)(A). The term includes taxes imposed by foreign countries that apply disproportionately to nonresident individuals and foreign corporations, particularly those targeting digital services or structured to exclude domestic taxpayers through revenue thresholds or scope restrictions. Generally applicable taxes—such as income, value-added, or withholding taxes—are excepted if they do not disproportionately affect United States persons. The provisions are intended to enforce remedies, such as increasing tax rates or imposing additional levies, on entities linked to jurisdictions implementing such taxes, as outlined in Sections 899(a) and (e).