Tax News & Views International Weekly: Transfer Tax Troubles

It’s one of the least-discussed provisions in the One Big Beautiful Bill Act, but it hasn’t been forgotten by the Department of the Treasury.

On Friday, Treasury and the Internal Revenue Service issued proposed regulations for the 1% remittance tax on cash and similar cross-border transfers. The new rules make several clarifications, including to specify that the tax will apply to traveler’s checks, as well as money orders and cashier’s checks.

In an early draft of the OBBBA, the remittance tax looked quite different. Appearing in the “Removing Taxpayer Benefits for Illegal Immigrants” section of the bill, the 5% levy applied to most transfers, but exempted U.S. citizens. The enacted provision, however, applies to all taxpayers—but only covers transfers made by “cash, a money order, a cashier's check, or any other similar physical instrument.” It exempts payments made through withdrawals from a bank or financial institution covered by the Bank Secrecy Act, or by a debit or credit card issued in the U.S.

Treasury’s new release highlights how such a category-based approach can be less straightforward than it might seem. The rules specify that traveler’s checks are covered by the tax, as they are “virtually indistinguishable” from money orders or cashier’s checks. Whether a personal check applies depends on the situation—if it is cashed by the remittance provider and then used for the transaction, Treasury says it will consider this two separate transactions, with the remittance tax applying to the final transfer.

Furthermore, while a pre-paid debit card is exempt under the law, the rule states that if it is supplied by the remittance provider to use for the transfer, that’s caught by the tax’s “anti-conduit rules,” which negate any transaction with the principal purpose of avoiding the tax. That provision will be enforced based on “all facts and circumstances,” including the behavior of the provider and third parties.

It may take vendors a while to understand this new regime, something that Treasury has already acknowledged. Citing “challenges” in implementation, it waived 2026 penalties for remittance providers who failed to deposit the required excise tax on time, in an October 2025 release.

Noteworthy Items This Week

Four Countries Advance Compliance With Minimum Tax Rules – Stephanie Soong, Tax Notes ($):

Brazil, Finland, Germany, and Turkey have issued guidance, proposed legislation, or released draft forms to help taxpayers in scope of their pillar 2 global and domestic minimum tax regimes fulfill their administrative obligations.

The Finnish Tax Administration published guidance April 9 on the operation of Finland’s Minimum Tax Act, explaining how to identify a group under the rules, how to determine where group units are located and whether they are in or out of scope, and how to allocate a group’s annual income to group units. The guidance also addresses the application of the act to group restructurings and joint ventures, as well as the effect that mergers and separations have on the rules.

Bessent Says Trump’s Tariff Rates Could Be Restored by July – Laura Curtis, Bloomberg Tax ($):

“We had a setback at the Supreme Court in terms of the tariff policy, but we will be implementing or conducting Section 301 studies, so the tariffs could be back in place at the previous level by beginning of July,” Bessent said Tuesday at a Wall Street Journal event in Washington.

The Treasury secretary said because the Section 301 tariff authority has already been tested in the courts, business leaders are able to start planning and making decisions around capital expenditures.

Fate Of Wealth Tax Hangs In Balance In Hungary Election – Eleanor Butler, Law360 Tax Authority ($):

A wealth tax proposed by Tisza would amount to 1% on assets exceeding 1 billion forints ($3.1 million). It's unclear exactly how many Hungarians would pay the tax, as details of the proposal and its implementation are yet to be refined. However, It is expected to be a small fraction of the population — which, in some experts' view, raises questions about its ability to raise revenue.

Nevertheless, the wealth tax proposal may serve to send a message about Tisza's intentions to tackle government corruption should it win the election.

The tax would signal "that this would be a government … acting more in the spirit of the [European Union] treaties and integration and common values," said Júlia Pőcze, researcher at the Centre for European Policy Studies.

What Commenters Want in the Material Assistance Rules – Marie Sapirie, Tax Notes ($):

Where are the rules on prohibited foreign entities? That’s the question bubbling beneath the surface — and sometimes coming right to the top — of many of the comment letters in response to Notice 2026-15, 2026-11 IRB 658. The notice primarily addresses the calculation of the material assistance cost ratio.

The notable omission from Notice 2026-15 — focused on by multiple comment letters — was guidance on the prohibited foreign entity portions of the One Big Beautiful Bill Act. The foreign-influenced rules are “getting to be problematic. We’re starting to see certain financial institutions question participation in certain deals due to uncertainty about the application of the rules,” said David Burton of Norton Rose Fulbright US LLP.

The lack of clarity around how and when to measure Chinese debt or ownership is too much is causing some market participants to stick with credits under sections 45 and 48, rather than investing in projects that intend to use sections 45Y and 48E, he said.

A Free Lunch: Why Swedes Pay Taxes With a Smile – Bengt Ljung, Tax Notes ($):

Swedes may not be ecstatic about paying taxes, but they accept them far more easily than most — no mean feat, considering that the Scandinavian country’s tax burden is the eighth highest in the world.

At 41.4 percent of GDP in 2023, Sweden’s stats are just 2.4 percentage points shy of France's in the top spot. That tax pressure doesn’t seem like anything to smile about.

The secret is a mix of benevolent factors that result in strong support for the tax system. In a simple, relatively efficient tax regime under which both corruption and tax evasion are low, trust is high. Crucially, the revenue collected benefits all taxpayers through a wide range of free or low-cost welfare services, professor Daniel Waldenström of Stockholm’s Research Institute of Industrial Economics told Tax Notes March 23.

Public Domain Superhero of the Week

Every week, a new character from the Golden Age of Comics, who’s fallen out of use.

This week’s entry: The Spider Queen

Debut Year: 1941

Debut Publication: The Eagle #2

Origin Story: After her husband's murder, she discovered his secret invention--super-strong "spider-web fluid"--which she uses to seek vengeance and fight crime.

Superpowers: Like another superhero who would come along decades later, she uses the synthetic web along with her athletic skills to ambush criminals in costume.

Eide Bailly's International Tax Team and our affiliates at HLB, The Global Advisory and Accounting Network, stand ready to assist with your worldwide tax needs.

Tax News & Views International Weekly: Transfer Tax Troubles

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Alex Parker