INSIGHTS
Bold new international tax reform
TAX ALERT |
Authored by RSM Canada
On June 5, 2021, the G7 agreed to global tax reform measures targeting large multinational companies (MNEs). The tax reform aims to: a) tax multinationals in the countries where they operate; and b) subject multinationals to a global minimum tax rate of at least 15% (the June 5 Agreement).
Less than a month later, 130 countries and jurisdictions, including Canada and the United States, have issued a Statement to work collaboratively to reform the international taxation rules and to ensure that MNEs pay a fair share of tax wherever they operate. In particular, these countries and jurisdictions endorsed the two-pillar approach:
- Pillar One will ensure a fairer distribution of profits and taxing rights among countries with respect to the largest MNEs, including digital companies. It would re-allocate some taxing rights over MNEs from their home countries to the markets where they have business activities and earn profits, regardless of whether MNEs have a physical presence there.
- Pillar Two seeks to introduce a global anti-base erosion rule through the introduction of a global minimum corporate tax rate of 15% that countries can use to protect their tax bases.
The participating nations have set October 2021 as the deadline for finalizing the remaining technical work on the two-pillar approach, with a plan for effective implementation in 2023.
Middle market companies with significant digital sales or those with low global effective tax rates should carefully review the Statement as the two-pillar approach is likely to impact business decisions.
Let's Talk!
Call us at (519) 426-5160 (Simcoe) or (519) 842-4246 (Tillsonburg) or fill out the form below and we'll contact you to discuss your specific situation.
This article was written by Jiani Qian, Nakul Kohli and originally appeared on 2021-07-09 RSM Canada, and is available online at https://rsmcanada.com/our-insights/tax-alerts/bold-new-international-tax-reform.html.
The information contained herein is general in nature and based on authorities that are subject to change. RSM Canada guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM Canada assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.
RSM Canada Alliance provides its members with access to resources of RSM Canada Operations ULC, RSM Canada LLP and certain of their affiliates (“RSM Canada”). RSM Canada Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM Canada. RSM Canada LLP is the Canadian member firm of RSM International, a global network of independent audit, tax and consulting firms. Members of RSM Canada Alliance have access to RSM International resources through RSM Canada but are not member firms of RSM International. Visit rsmcanada.com/aboutus for more information regarding RSM Canada and RSM International. The RSM trademark is used under license by RSM Canada. RSM Canada Alliance products and services are proprietary to RSM Canada.
Good Redden Klosler a proud member of the RSM Canada Alliance, a premier affiliation of independent accounting and consulting firms across North America. RSM Canada Alliance provides our firm with access to resources of RSM, the leading provider of audit, tax and consulting services focused on the middle market. RSM Canada LLP is a licensed CPA firm and the Canadian member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.
Our membership in RSM Canada Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.
For more information on how Good Redden Klosler can assist you, please call us at (519) 426-5160 (Simcoe) or (519) 842-4246 (Tillsonburg).