Canadian companies with international operations avoid billions in taxes every year. This is of course not a secret. But the noose begins to tighten. The OECD is leading an initiative to introduce a global minimum tax for companies. What is Canada waiting for? The federal government should announce a framework for a minimum tax in the coming spring budget.
The OECD has been attacking global tax avoidance for several years. With the support of all OECD and G20 member countries, a 15-point plan was issued in 2015 to combat “soil erosion and profit shifting” (BEPS). The BEPS Action Plan sought to curb many of the strategies used by multinationals to shift income from high-tax to low-tax areas.
However, little has changed over the next five years. International tax avoidance has continued practically unabated. It’s a slap in the mouth: fill one gap and tax planners find another. So what to do What if companies had to pay a minimum tax regardless of the tax avoidance strategies? This is exactly what the OECD has been working on. The last meeting took place at the end of January, attended by finance ministers from six countries, including our own Chrystia Freeland. They all stressed the importance of reaching consensus by mid-2021. But why wait The United States introduced a minimum tax in 2017 – a new tax on “Low Global Intangible Tax Income” (GILTI).