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Tax planning developments: Important international tax changes

Author(s): Patrick Marley, Ilana Ludwin

Dec 13, 2021

In 2021, a number of significant changes were proposed for international taxation in Canada. The 2021 Canadian federal budget (Budget 2021) introduced three key international tax proposals relating to earnings stripping, anti-hybrid measures and a digital services tax. Individually, each proposal represents a significant change to existing practice and gives rise to complex tax issues affecting a wide range of large international corporations. Collectively, they represent an ambitious project intended to conform with some of the core proposals coming out of the OECD Base Erosion and Profit Shifting (BEPS) work. Budget 2021 provided descriptions of the expected rules with varying degrees of specificity, but without specific statutory language.

In addition, Canada continues to work with the OECD, G20 and approximately 140 members of the Inclusive Framework on BEPS on significant international tax reform proposals (the Two Pillar Solution or BEPS 2.0)...