Finance confirms that Pillar 2 is on track

In an update on Pillar 2, Trevor McGowan noted that the continued aim is to release draft implementing legislation for the income inclusion rule (IIR) and domestic minimum top-up tax in the coming months, with draft legislation for the “under-taxed profits rule” (UTPR) to follow next year.

The legislation is being drafted using Canadian legislative drafting conventions, but seeks to follow the OECD model closely. The legislation needs to be recognized by other countries as “qualified rules,” so that they respect Canada’s primary right to tax in accordance with the Pillar 2 framework. The government intends to submit Canada’s draft legislation for peer review soon after it is publicly released, with a view to securing “qualified” status for Canada’s legislation, thus giving taxpayers certainty as to which countries’ rules will apply before the rules come into effect.

Neal Armstrong. Reference: 17 May 2023 IFA Finance Update under “Pillar 2.”