Today, the Organisation for Economic Co-operation and Development (OECD) announced that 136 countries, including Canada, have agreed on the elements of the landmark two-pillar plan on international tax reform. The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, today issued the following statement:
“Canada strongly supports international efforts to end the corporate race to the bottom and to ensure that all corporations, including the world’s largest corporations, pay their fair share. Today’s agreement will ensure a level playing field for Canadian workers and Canadian businesses in the global economy.
“Canada’s strong and essential social safety net is built on a robust national tax base. That is why those who do business in Canada must pay their fair share. Canada has a clear national interest in this multilateral deal, which protects against erosion of the tax base and which will generate additional revenue for Canada.
“Canada looks forward to working with our international partners to bring this ambitious new tax framework into effect and to legislate its implementation. Canada’s priority and preference has always been a multilateral agreement.
“To ensure that Canadians’ interests are protected in any circumstance, we intend to move ahead with legislation finalizing the enactment of a Digital Services Tax (DST), by January 1, 2022, in keeping with Budget 2021. The DST would be imposed as of January 1, 2024, but only if the treaty implementing the tax regime under this global agreement has not come into force. In that event, the DST would be payable as of 2024 in respect of revenues earned as of January 1, 2022. It is our sincere hope that the timely implementation of the new international system will make this unnecessary.
“I welcome this historic international agreement. It is a win for the Canadian middle class and Canadian businesses. It will end the race to the bottom in taxation and put Canadian businesses on a level playing field with our global competitors.”
- Pillar One of the OECD agreement will ensure that the largest and most profitable global corporations, including large digital corporations, pay a fair share of tax in the jurisdictions where their users and customers are located.
- Pillar Two of the OECD agreement will ensure that multinational enterprises are subject to a minimum level of tax of at least 15 per cent, no matter where their profits are earned. This will help to end the race to the bottom in corporate taxation.
- Organisation for Economic Co-operation and Development (OECD) Inclusive Framework on Base Erosion and Profit Shifting (BEPS): Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy (October 8, 2021)