‘Revenge Tax’ Would Slam Broad Swath of Companies, Industries

Some of the world’s biggest companies—from Japanese automaker Honda Motor Co. to UK oil giant BP to German software company SAP—stand to face steeper US taxes if the proposed “revenge tax” becomes a reality.

All of the companies have invested heavily in US operations and hail from countries vulnerable to Congress’s retaliatory-tax plan, known as Section 899. They’re far from alone: Companies from dozens of countries and spanning a wide range of industries stand to be hit by Section 899, tax observers say.

Companies have said little or nothing about whether they’ll be affected—most companies contacted for this story declined to comment or didn’t respond. One, Japan’s Takeda Pharmaceutical, said in a statement that it hopes the proposal is revised “to ensure that ongoing investment and growth in the US is encouraged and not compromised.”

But an analysis of the companies’ financial disclosures and US lobbying spotlights some companies that should be concerned.

“The provision is quite broad in who it hits,” said Adam Michel, director of tax policy studies for the Cato Institute. If enacted, “the tax is going to hit most sectors that have foreign investment.”

Signaling Worry

Section 899—versions of which are in both the House-passed tax bill and the Senate Finance Committee draft—would raise US tax rates on taxpayers from any countries deemed to be imposing “unfair” taxes on American companies. The Senate version would take effect later and reduce the potential magnitude.

The proposal deems many of the countries with the most US investment to be imposing unfair taxes that make their companies subject to retaliation, such as taxes that use a key mechanism in implementing the global 15% minimum tax, or taxes on big digital companies. The UK, Japan, and Germany all have or are implementing one or both. Many of the proposal’s backers see it as a bargaining chip to push other countries to change their policies, rather than imposing a retaliatory tax. Some European business groups are pushing their governments to compromise.

Assessing Section 899’s potential impact on any individual company is complex, but in looking at who might be affected, “I think it represents a pretty large swath of our major foreign investment,” said Jacob Trevick, a partner at K&L Gates, who stressed he was speaking generally and not with regard to any specific company.

But looking at companies from the affected countries that have made significant US investments or have telegraphed concerns over retaliatory taxes is “totally a reasonable approach” to determining who might be affected, said Kyle Pomerleau, a senior fellow at the American Enterprise Institute.

Honda had 5.44 trillion yen ($37.3 billion) in US non-current assets—essentially a measurement of factories, equipment, and intangible assets—as of March 31, according to its most recent US Securities and Exchange Commission filing. That’s 52% of its global total. Honda has major manufacturing facilities in Ohio, and the company said in January it would invest more than $1 billion to retool those facilities to make gas, electric, and hybrid vehicles on the same production line.

Manufacturing, More Sectors at Risk

Other foreign automakers also make cars in the US, and such manufacturers may be among those most affected by Section 899, said Jonathan Samford, president and CEO of the Global Business Alliance. Given the level of foreign investment in US manufacturing, “it’s fair to say that manufacturers will take a disproportionate hit,” he said.

BP had $63.4 billion in US non-current assets at the end of 2024, or 44% of its worldwide total, and $6.6 billion in US capital expenditures in 2024, 40% of its total. BP has production platforms off the Gulf Coast, oil and gas wells in Texas and Louisiana, and refineries in Washington state and Indiana, among many other US facilities.

SAP had 26.84 billion euros ($30.1 billion) in US non-current assets in 2024, 63% of its worldwide total. The company booked 10.85 billion euros in 2024 after-tax profit at its major US subsidiaries, mostly at SAP America in Newtown Square, Pa.

Danish pharmaceutical company Novo Nordisk Inc. lobbied Congress earlier this year on bills that formed the basis of the Section 899 proposal, according to its most recent lobbying-disclosure report. The company has 57.14 billion Danish kroner ($8.8 billion) of US property, plant and equipment, and intangible assets, including a major North Carolina production facility, and it plans a $4.1 billion investment to build a second North Carolina facility.

And Dutch health-technology company Royal Philips said in its SEC filings that President Donald Trump’s move to withdraw the US from the global tax agreement brokered by the Organization for Economic Cooperation and Development brings “potential risk of retaliatory tax measures.” Philips had 11.61 billion euros ($13.3 billion) in US property, plant and equipment, and intangible assets in 2024—73% of its global total from “main countries.”

Trevick said smaller foreign companies doing business in the US may be vulnerable, too, especially to the portion of the proposal that increases the US base erosion and anti-abuse tax on companies from countries deemed to have unfair taxes. BEAT aims to discourage companies from shifting profits out of the US. “It’s not just going to be the super-large companies,” he said.

Some companies that appear to have a lot at stake continue to announce new US investments, even given Section 899 and tariff concerns. Takeda said in May that it would invest $30 billion in the US by 2030. The company has a key research-and-development site in Cambridge, Mass., and 8.22 trillion yen in US non-current assets as of March 2024, 70% of its global total.

But major corporate investments take time to plan. Companies may be going ahead with the hope that Section 899 and other policies that may discourage US investment “will be scaled back or rolled back before you actually fully commit,” Michel said.