Lloyd’s has issued a positive statement following the removal of Section 899 from the Republican reconciliation bill, a provision that had the potential to impose significant additional tax burdens on U.S. income for non-U.S.-domiciled businesses.

The Section 899 measure had been viewed by UK businesses as a potential retaliatory tax, which could have strained their operations in the United States. Lloyd’s expressed its gratitude toward the UK government’s efforts, particularly Chancellor Rachel Reeves, who collaborated with G-7 finance ministers to secure the removal of this provision.

Sir Charles Roxburgh, Chair of Lloyd’s, commended the leadership, saying, “We are extremely grateful to the Chancellor for her work alongside G-7 Finance Ministers, which led to the announcement from the United States Treasury and Congress that Section 899 will no longer be part of the reconciliation bill. This outcome will have a positive impact not only on Lloyd’s business but also on all UK companies with a presence in the U.S., facilitating continued international investment and benefiting U.S. businesses and local communities.”

Lloyd’s, which has been a key player in providing insurance capacity to the U.S. market for over a century, emphasized its ongoing commitment to supporting the U.S. economy. Roxburgh continued, “The United States remains our largest market, and we are pleased to continue our long-standing relationship by contributing to the nation’s economic growth.”

With Section 899 now removed from the so-called “One Big Beautiful Bill Act” (OBBBA), the UK government and its G-7 counterparts can shift focus to developing a comprehensive strategy for global tax reform. The next steps will center on implementing a global minimum tax and addressing aggressive tax avoidance, all without the threat of retaliatory tax measures looming over negotiations.

Rachel Reeves, the UK Chancellor of the Exchequer, expressed her relief following the development, saying, “I will always fight for the best interests of British businesses. Today’s agreement brings much-needed stability and certainty to those who had voiced concerns about the potential impact. With the removal of Section 899, we can now continue the work of ensuring a fair and equitable global tax system, free from threats of retaliation.”

The UK Treasury’s statement also highlighted that the G7 nations are aligned on the need to tackle aggressive tax avoidance while maintaining a level playing field in international business. The removal of the retaliatory tax provisions will allow for more productive dialogue on global tax reforms, which could eventually culminate in a multilateral agreement.

A major element of these global tax reforms is the OECD’s Pillar 2, which seeks to establish a minimum global corporate tax rate of 15%. This initiative, which was agreed upon by OECD members in October 2021, has yet to be fully enacted by the U.S., adding further complexity to the global tax landscape.

Rain Newton-Smith, Chief Executive of the Confederation of British Industry (CBI), also weighed in on the matter, stating, “The commitment of the U.S. to remove retaliatory tax measures brings much-needed clarity for UK-based multinational businesses. There are no winners in a tax standoff, and avoiding disruptions to the flow of investment, finance, and jobs across the Atlantic is beneficial to both economies.”

However, Newton-Smith pointed out that uncertainty remains, particularly with the reconciliation bill’s final passage still pending and other possible actions by Congress. The UK’s Digital Services Tax is also under scrutiny, adding to the complexity of the situation.

Looking to the future, Newton-Smith stressed the importance of rebalancing global tax rules through multilateral agreements. “It is critical that we establish a global tax framework that simplifies the system, reduces compliance burdens, and ensures UK companies remain competitively positioned in a fair and transparent market.”

This moment provides a key opportunity for the OECD to address long-standing issues in the global tax system, creating a simpler, fairer regime for multinational businesses.