The US House Ways & Means Committee held a markup of a budget reconciliation bill beginning 13 May and approved the nearly 400-page bill the next day. The proposed legislation encompasses the full array of tax provisions and revenue offsets meant to accompany extensions of Tax Cuts & Jobs Act (TCJA) provisions expiring at the end of 2025. The Committee debated and voted down a host of Democratic amendments before approving the bill on 14 May, following more than 17 hours of consideration.

The revised Joint Committee on Taxation estimate puts the total cost of the Ways & Means package at $3.8t. Materials related to the markup are here.

The Ways & Means-approved reconciliation bill contains a number of key international tax provisions, including:

• Permanent codification of existing global intangible low-taxed income (GILTI) and foreign derived intangible income (FDII) deduction rates (50% and 37.5%, respectively)
• Permanent extension of the current Base Erosion Anti-abuse Tax (BEAT) framework, maintaining the 10% rate (11% for banks/dealers) and the research (and other) credit addback mechanism
• A five-year temporary reinstatement for a five-year window of the earnings before interest, taxes, depreciation and amortization (EBITDA)-based limitation under IRC Section 163(j) (tax years beginning after 31 December 2024, and before 1 January 2030)
• A new IRC Section 899, which would impose retaliatory measures against a foreign country's discriminatory and extraterritorial taxes and potentially result in a higher BEAT for some taxpayers; it would increase various tax rates, including the rate of withholding, by as much as 20 percentage points above the statutory rate, on foreign persons tax resident in, or controlled by, foreign persons that are tax residents of discriminatory foreign countries

In a late-breaking development, the House Budget Committee, charged with assembling the budget reconciliation recommendations of 11 House committees, today (16 May) voted down the bill. Five Republican members voted against the reconciliation bill, with four members saying they would not support the legislation in its current form. Negotiations to address the concerns of the Republication members are ongoing.

Once the reconciliation bill ultimately clears the Budget Committee, the legislation will proceed to the Rules Committee and the House floor, with any unresolved issues likely addressed along the way. In preparation for the final vote, House Speaker Mike Johnson (R-LA) on 15 May met with certain House Republican groups that have voiced objections to certain aspects of the bill and that could derail the final floor vote. The Speaker earlier set a deadline to pass the budget bill in the House before the Memorial Day recess.

Whatever reconciliation legislation eventually passes the House is likely to be modified in the Senate, which could be a backstop for revenue increases and other proposals. Republican Senators are increasingly raising concerns about the House legislation, including proposed phaseouts of certain clean energy provisions as well as other measures.

The OECD is currently focused on US concerns related to the BEPS Pillar Two and tax sovereignty, according to comments this week by Manal Corwin, OECD Director of the Centre for Tax Policy and Administration. She added that the OECD is examining how to reduce BEPS complexity, noting that the costs of compliance should not exceed revenues. The OECD official was also quoted as saying after the Pillar Two issues are addressed, the discussion will return to BEPS Pillar One. She added that the Trump Administration "has indicated that is a discussion they are willing to engage in."

The OECD on 9 May released Consolidated Commentary to the Global Anti-Base Erosion (GLoBE) Model Rules, which "incorporates Agreed Administrative Guidance that has been released by the Inclusive Framework since March 2022 up until March 2025." The consolidated commentary provides guidance on interpreting and applying the GLoBE Rules to promote consistent and common interpretation and application of the rules.