Potential consequences of two pillar OECD framework

Letter to The Right Honourable Justin Trudeau, P.C., M.P., Prime Minister of Canada, regarding the Organization of Economic Co-operation and Development (OECD) two pillar global tax framework.

Prime Minister, 

I am writing on behalf of the Business Council of Canada (BCC) further to a letter we had sent to Deputy Prime Minister Freeland urging your government to hold off implementing the proposed Organization of Economic Co-Operation and Development (OECD) two pillar global tax framework until such time as the United States has done so. 

The BCC has long taken the position that if Canada unilaterally imposes a digital services tax (DST), it will undermine our economic relationship with the U.S. – our most important trading partner. In addition, we have argued that unilaterally imposing the global minimum tax (GMT) before the U.S. would threaten our comparative tax competitiveness. 

For these reasons, we have repeatedly appealed to your government to align Canada’s implementation of the OECD tax framework with that of the United States. This would ensure Canadian trade and investment are not penalized. It would also be in keeping with the spirit of the OECD negotiations calling for all countries to act in tandem.  

Since our earlier letter to Deputy Prime Minister Freeland, departmental officials at Finance Canada have been briefed on the unintended consequences that would result from the unilateral implementation of the two pillar OECD framework. We understand that they are actively canvassing potential solutions with your office.

We hope that you will give these solutions your full and fair consideration. 

Yours very truly, 

Goldy Hyder