Multinationals — Act now to meet pillar two obligations

​This highly anticipated legislation, which was released on August 4, 2023, is based on Pillar Two of the Organization for Economic Cooperation and Development’s (OECD) two-pillar solution to address the tax challenges from digitalization of the economy. Finance’s complex draft legislation, which is intended to ensure that multinationals (MNEs) pay a minimum 15% rate of tax in each jurisdiction, will apply to fiscal years beginning on or after December 31, 2023. Note that these rules affect not only MNEs headquartered in Canada, but also Canadian entities of foreign-based MNEs, as the rules contain a domestic minimum top-up tax.

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