How is Section 899 of the proposed U.S. 2025 tax reform expected to impact Lumine Group (LMN) in the short and medium term, particularly in terms of tax liabilities and profitability, given that it is a Canadian company operating in the U.S.? Do these potential impacts make LMN less attractive as an investment at this time?
If passed, it likely makes any country with US profits that is not US-domiciled less attractive. LMN does not pay dividends so the immediate impact should be less, as investors will likely focus on the possibility of increases in withholding taxes. But money-transfers out of the US may be impacted. If passed, we think most companies impacted may 'hunker down' and not repatriate cash for a while, and try to ride out the bill into the next administration. This may not hurt companies such as LMN as much, if they continue to make US acquisitions with their cash flow instead. Still, it is a negative development and we have some other comments posted today on this. Like tariffs that keep getting postponed, there is a chance that this bill does was well. It does not really make economic sense for the US as the country clearly needs foreign investors to prosper. But the administration seems to be looking short term and not long term.