On January 25, 2025, President Donald Trump signed an executive order declaring that the global corporate minimum tax deal, negotiated by the Biden administration in 2021, is void in the United States. This decision has significant implications for international tax policy, particularly for countries like Canada, where companies and pension funds had been lobbying for favorable tax treatment prior to this announcement [e8964c59].
The OECD's Global Tax Deal, which aimed to establish a minimum tax rate of 15% on multinational enterprises, was signed by 136 countries. However, Trump's withdrawal from this agreement could potentially create a tax-free haven in the U.S., attracting more investment as the country moves to lower its corporate tax rates. Trump has proposed reducing the corporate alternative minimum tax from 21% to 15%, contrasting sharply with President Joe Biden's previous suggestion to increase the corporate tax rate to 28% in his 2025 budget [e8964c59].
This shift in U.S. tax policy raises concerns for Canadian businesses. Julia Klann from Doane Grant Thornton warns that a lower U.S. tax rate could disadvantage Canadian companies, making it more challenging for them to compete. The Tax Cuts and Jobs Act (TCJA) of 2017 had already lowered the U.S. corporate tax rate from 35% to 21%, making the U.S. more attractive for capital-intensive businesses, according to a 2018 PwC report [e8964c59].
As Canada navigates these changes, companies like the Ontario Municipal Employees Retirement System and TD Bank are actively lobbying on tax issues, seeking to ensure that Canadian interests are represented in the evolving global tax landscape. The implications of Trump's executive order extend beyond the U.S., potentially reshaping investment flows and tax strategies across North America and beyond [e8964c59].