May 31, 2022
Global Minimum Tax Could See Canada Suffer Net Reduction in Wealth and Tax Revenues, Need a "Canada First" Approach
- The Global Minimum Tax of 15 percent, also called “Pillar Two”, could have a material adverse effect on Canadian wealth and tax revenues, according to a new report from the C.D. Howe Institute.
- In 2022, the federal budget launched consultations on the implementation of new proposed rules for a Global Minimum Tax, which would apply to multinational enterprises (MNEs) with annual consolidated revenues generally of EUR $750 million. This proposal was previously endorsed in principle by members of the OECD and G20. Author Angelo Nikolakakis assesses the introduction of this veritable tax smorgasbord and its potential implications for Canada.
- If relevant foreign jurisdictions increase their tax rates accordingly, either in general or under Pillar Two, Canada’s adoption of Pillar Two might not raise the $3.5 billion in annual tax revenues initially estimated by Canada’s Finance Minister, writes Nikolakakis. Instead, Canada could suffer a net reduction in wealth and tax revenues.