Question Period Note: 2022-2023 SUPPLEMENTARY ESTIMATES (C) – INTERNATIONAL TAX REFORM

Why is the Canada Revenue Agency seeking funding in the Supplementary Estimates (C) for the administration of tax measures related to international tax reform?

• Amongst its goals, the Canada Revenue Agency (CRA) has two underlying goals—to make it easier for the vast majority of taxpayers who want to pay their taxes and more difficult for the small minority who do not.
• Canada is committed to ensuring multinational corporations pay their fair share of tax wherever they do business, and the government is working with international partners to make that happen.
• The CRA is seeking $15.1M in funding to administer three measures that build on the Organization for Economic Co operation and Development (OECD) G20 Base Erosion and Profit Shifting project:
o the OECD model rules for reporting by digital platform operators, which will ensure taxpayers are compliant with their tax obligations;
o the implementation of the Pillar One, reallocation of taxation rights, and
o the Implementation of the Pillar Two, global minimum tax, as part of international tax reform.

Through the 2022-2023 Supplementary Estimates (C), the Canada Revenue Agency (CRA) is seeking $15.1M for the administration of tax measures related to international tax reform.

Model rules for reporting by platform operators with respect to sellers in the sharing and gig economy ($3.5M): The model rules were developed in light of rapid growth of the digital economy and in response to calls for a global reporting framework in respect of activities being facilitated by such platforms, in particular in the sharing and gig economy.

The requested funding will allow the CRA to develop systems to intake and store data, enhance international exchange systems, develop business intelligence solutions to aid in risk identification and assessment, and establish new compliance programs related to the platform economy to ensure platform participants (sellers) are compliant with their tax obligations.

Pillar One implementation – Phase I ($5.1M): Pillar One (reallocation of taxing rights) will ensure that the largest and most profitable global corporations, including large digital corporations, pay their fair share of tax in the jurisdictions where their users and customers are located.

The requested funding will allow the CRA to implement Phase I, which includes costs for systems enhancements in order to receive information, forms design and business requirements based on the information released from the OECD as the Pillar One model rules are finalized.

Pillar Two implementation – Phase I ($6.5M): Pillar Two (global minimum tax) would ensure that large multinational enterprises are subject to a minimum effective tax rate of 15% on their profits in every jurisdiction in which they operate. This will help end the race to the bottom in corporate taxation.

The requested funding will allow the CRA to implement the new tax measure in Phase I, which includes costs for forms design and development, establishing filing requirements and guidelines and systems development for returns processing, exchange and tax assessment.

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