Treasury to Revise Foreign Fund Tax Plan After Credit Warnings

The Treasury Department is retreating from a proposed overhaul of the way it taxes sovereign wealth funds and public pension funds, after private credit and private equity firms warned the changes could chill foreign investment in U.S. markets.

Government officials made the decision after feedback from the investment and real-estate industry, said a spokesman for the Treasury Department. “We are revising the proposal to address key issues and ensure it supports stable, long-term capital flows,” said the spokesman.

The proposal, floated by the Internal Revenue Service, would update the tax code’s section 892 to classify most US debt investments by ...