The largest corporations in the United Kingdom are engaged in urgent discussions with the Treasury regarding the White House’s proposal to increase taxes on their U.S. operations.

The ramifications of this new legislation are still being evaluated, potentially impacting a diverse array of companies, including major oil firms Shell and BP, banking powerhouses HSBC and Barclays, as well as pharmaceutical giants AstraZeneca and GlaxoSmithKline.

While the specific companies in talks with the Treasury remain undisclosed, section 899 could lead to a near doubling of the tax rate on profits and dividends earned by British firms in the U.S. to 41 percent.

This provision is part of Donald Trump’s “One Big Beautiful Bill” and has been characterized by Jason Smith, the chairman of the U.S. House of Representatives’ Ways and Means Committee, as a strategic move against foreign tax systems perceived to disadvantage American enterprises.

Tim Sarson, head of tax policy at KPMG UK, indicated that the potential consequences could be more severe for the UK than the tariffs imposed by Trump in April.

“We’re observing that while some major UK firms are primarily concerned with tariffs, others — particularly those in the service industry or sectors currently facing minimal or no tariffs — are significantly more apprehensive about section 899,” Sarson noted.

Investors are reportedly seeking more information from leading UK companies regarding how section 899 may impact their business operations.

The Treasury has been attentive to the concerns raised by major corporations in recent talks and is keeping them informed about the broader context of the UK’s trade negotiations with the U.S.

JP Morgan analysts stated, “The immediate effects of section 899 are felt more acutely by U.S. subsidiaries of foreign firms than by American companies themselves.”

Nonetheless, the proposed law has yet to be enacted and may face delays until 2027 to allow the administration time for negotiations on tax policy with other nations, as noted by Barclays analysts.

The Trump administration aims to leverage section 899 of the Internal Revenue Code as a countermeasure against nations it perceives as unjustly targeting American corporations for additional tax burdens.

Notably, it has previously expressed dissatisfaction with the UK’s digital services tax, which imposes a 2 percent charge on social media companies’ revenues exceeding £25 million in the UK.

The U.S. is also challenging rules on “undertaxed” profits, which increase tax rates for companies paying below the 15 percent global minimum established by the Organisation for Economic Co-operation and Development (OECD).