In the international tax field, Canada has implemented significant reforms affecting domestic and foreign companies. These measures aim to align the Canadian tax system with global trends and ensure equitable collection in the digital economy.
15% Global Minimum Tax
According to the OECD’s international agreement, Canada has adopted a 15% global minimum tax on multinationals’ profits. This measure, effective from January 1, 2024, aims to prevent tax evasion and ensure that large corporations contribute in the jurisdictions where they operate appropriately. Countries like the United Kingdom, Australia, and Japan have also implemented this tax, reflecting a globally coordinated effort to strengthen tax fairness.
Digital Services Tax (DST)
In addition, Canada has introduced a 3% Digital Services Tax on revenues generated by foreign technology companies from Canadian users. This measure, effective from the end of June 2024, applies back to 2022 to ensure that digital companies contribute tax based on their economic activity in the country. This policy has triggered debates, especially with the United States, which has opposed it, considering that it mainly affects its technology companies.
Implications for Businesses
Companies operating in Canada must adapt to this new tax environment. It is essential to review corporate structures and Transfer Pricing strategies to comply with tax obligations and avoid penalties. Implementing these taxes reflects the global trend toward greater transparency and fairness in the taxation of digital and transnational economic activities.
In summary, Canada has adopted tax measures to balance its tax system with international practices, ensuring that businesses, especially multinationals and digital ones, contribute fairly to the public inland treasury.
Source: Osler
