18 September 2025 Roundtable, 2025-1067901C6 - CLHIA 2025 - Q.1 - Impact of U.S. Withdrawal from OECD GMT Framework

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Given that the United States has indicated its intention to withdraw from the OECD Global Minimum Tax framework and may impose tariffs on countries applying minimum taxes to U.S.-based profits, what impact—if any—does this have on the CRA’s approach to administering the Income Inclusion Rule (IIR) for Canadian-headquartered multinational enterprises (MNEs) with U.S. operations taxed below 15%? Will this affect CRA’s administration of the proposed Undertaxed Profits Rule (UTPR)?

Position: The CRA administers and enforces tax legislation including the Global Minimum Tax Act in accordance with its provisions and any applicable regulations. It is not within the CRA's mandate to comment on foreign policy matters. International discussions are underway at the OECD/G20 Inclusive Framework on the development of a proposal for a side-by-side system that could provide for coexistence of the Pillar Two global minimum tax rules and the US tax system, with a commitment that any substantial risks that may be identified with respect to the level playing field, or risks of base erosion and profit shifting, will be addressed.

Reasons: Mandate of the Canada Revenue Agency.

CLHIA Roundtable – September 2025

Question 1 – Impact of U.S. Withdrawal from OECD GMT Framework

Question

Given that the United States has indicated its intention to withdraw from the OECD Global Minimum Tax framework and may impose tariffs on countries applying minimum taxes to U.S.-based profits, what impact—if any—does this have on the CRA’s approach to administering the Income Inclusion Rule (IIR) for Canadian-headquartered multinational enterprises (MNEs) with U.S. operations taxed below 15%? Will this affect CRA’s administration of the proposed Undertaxed Profits Rule (UTPR)?

CRA Response

The Canada Revenue Agency (CRA) administers and enforces tax legislation enacted by Parliament. The CRA’s role is to administer the Global Minimum Tax Act (endnote 1) (GMTA) in accordance with its provisions and any applicable regulations. While the CRA monitors the evolving international tax and trade environment, it is not within its mandate to comment on foreign policy matters or potential retaliatory measures. Those matters fall within the responsibility of the Department of Finance and Global Affairs Canada. The CRA’s administration of the GMTA is guided by the legislation, including the interpretive rule in subsection 3(1) of the GMTA.

As indicated in the June 28 statement by the G7 on global minimum taxes, international discussions are underway at the OECD/G20 Inclusive Framework on the development of a proposal for a “side-by-side” system that could provide for the coexistence of the Pillar Two global minimum tax rules and the US tax system, with a commitment that any substantial risks that may be identified with respect to the level playing field, or risks of base erosion and profit shifting, will be addressed.

James Atkinson
2025-106790
September 18, 2025

ENDNOTES

1 Unless otherwise stated, all references to a statute are to the relevant provision of the Global Minimum Tax Act, S.C. 2024, c.17, s.81 (GMTA).