How will the Global Minimum Tax Act (GMTA) be administered in circumstances where its enacted state does not reflect changes to the GloBE Model Rules, or to new GloBE Commentary or Administrative Guidance?
CRA indicated that, to apply the GMTA as intended, as new administrative guidance is released, the DST and Global Tax Section of CRA will consult with the Department of Finance to determine, on a case-by-case basis, how such guidance should be handled – whether there is a potential legislative amendment or whether CRA will apply the new guidance to inform its interpretation of the GMTA.
CRA was provided with a particular example regarding s. 17(6) of the GMTA. CRA indicated that its DST and Global Tax Section has consulted with the Department of Finance, and understands that additional proposed amendments to the GMTA may be in order to accommodate the matching of covered taxes with the constituent entities’ income in accordance with recent OECD guidance and in contrast to draft amendments to the GMTA released in August 2024. Therefore, CRA will administer the provisions of the GMTA to achieve what the administrative guidance clarifies should be the outcome – that is, the constituent entity covered taxes paid by the upper-tier entity being pushed down to the constituent entity.