Corporate Minimum Tax Options

Canada faces a quandary. Should it adopt a corporate minimum tax under the pillar two agreement that is consistent other agreeing countries, or should it adopt a US-style corporate alternative minimum tax that is more harmonized with the minimum tax of the United States, its largest trading partner? There is no easy answer to this question. The pillar two corporate minimum tax is complex and distortionary, even though it puts a floor on tax-rate competition at 15 percent; but a made-in-Canada corporate minimum tax could reduce distortions while raising more revenue by being applied to a wider group of companies. The authors of this paper argue that Canada should take its time to see whether the US corporate alternative minimum tax qualifies as a minimum tax, giving Canada better options for a corporate tax than pillar two's global tax.