Canada Update on Two Pillars: Draft GMT and DST Legislation

On August 4, 2023, the Canadian federal government released two draft legislative proposals relating to the OECD’s Pillar Two and the Canadian Digital Services Tax (DST) (as a backstop to Pillar One) that would impact a wide range of entities beyond Canada’s borders and affect large multinational enterprise (MNE) groups.

The draft Global Minimum Tax Act (GMTA) is designed to implement some components of Pillar Two’s global minimum tax: the income inclusion rule (IIR), the domestic top-up tax that is intended to be a qualified domestic minimum top-up tax (QDMTT), and the undertaxed profits rule (UTPR). The August 4 proposal ...