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.
