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Canada Gets Ready to Implement the Global Minimum Tax

12th April 2022

For months, we’ve been hearing about the European Union’s attempts at getting member states to unanimously agree to Pillar Two, the 15% global minimum tax, which, of course, is the second part of the OECD’s global tax overhaul. (Pillar One, which allows 100 of the world’s largest companies to be taxed in jurisdictions where they have customers as opposed to where they have headquarters, is the first part.) But so far, the EU just hasn’t been able to get a stubborn Poland onboard. Then there’s the U.S. and questions swirling around whether or not it will adopt Pillar Two now that proposed changes to the global intangible low-taxed income (GILTI) have been stalled. Canada, however, appears to be all in. The country’s budget for 2022, which was published on April 7, includes a proposal for the global minimum corporate tax. The government plans to release draft legislation on Pillar Two for public comment. And how’s this for efficient? The income inclusion rule, which would allow Canada to charge Canadian companies the difference when they pay less than 15% in taxes in other jurisdictions, and the qualified domestic minimum top-up tax rule, which allows low-tax jurisdictions to implement the top-up tax over other jurisdictions, could be up and running as soon as 2023.