Statement by the Deputy Prime Minister on the new international agreement on tax reform
October 8, 2021 – Ottawa, Ontario – Department of Finance Canada
Today, the Organization for Economic Co-operation and Development (OECD) announced that 136 countries, including Canada, have agreed to the elements of the historic two-pillar plan on international tax reform. The Honorable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, today issued the following statement:
“Canada strongly supports international efforts to end the race to the bottom in business and ensure that all businesses, including the world’s largest corporations, pay their fair share. Today’s agreement will ensure a level playing field for Canadian workers and Canadian businesses in the global economy.
“Canada’s strong and essential social safety net rests on a strong national tax base. That is why those doing business in Canada must pay their fair share. Canada has a clear national interest in this multilateral agreement, which protects against erosion of the tax base and which will generate additional revenue for Canada.
“Canada looks forward to working with its international partners to implement this ambitious new tax framework and to legislate on its implementation. Canada’s priority and preference has always been a multilateral agreement.
“To ensure that the interests of Canadians are protected at all times, we intend to move forward with legislation finalizing the passage of a digital services tax (RST), by January 1, 2022, in accordance with the 2021 budget. RST would be taxed as of January 1, 2024, but only if the convention implementing the tax regime of this global agreement has not entered into force. In this case, DST would be payable from 2024 in respect of income earned on January 1, 2022. We sincerely hope that the swift implementation of the new international system will make this unnecessary.
“I welcome this historic international agreement. It is a victory for the Canadian middle class and Canadian businesses. This will end the race to the bottom in taxation and put Canadian businesses on a level playing field with our global competitors.
- The first pillar of the OECD agreement will ensure that the world’s largest and most profitable companies, including large digital companies, pay a fair share of tax in the jurisdictions where their users and customers are located.
- The second pillar of the OECD agreement will ensure that multinational companies are subject to a minimum tax level of at least 15 percent, regardless of where their profits are made. This will help put an end to the race to the bottom in corporate taxation.