Canada Implements Pillar Two (IIR and QDMTT) and Proposes UTPR

Canada recently released amendments to its Global Minimum Tax Act (GMTA) (enacted June 20, 2024), which implements Pillar Two from the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS). As enacted, the legislation includes two of the interlocking measures from Pillar Two that will affect multinational enterprise (MNE) groups that meet the €750-million consolidated revenue threshold.

The first measure—the income inclusion rule (IIR)—imposes a top-up tax to ensure that the effective tax rate (ETR) on income from any jurisdiction where an MNE is taxed falls below 15% is brought up to the minimum rate. This rule is applicable ...