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The global minimum tax is a 15% floor on the profits of very large multinational groups. It only reaches groups with at least €750 million in revenue in two of the last four years, so if you run a small Canadian company, it almost certainly doesn’t touch you. Canada wrote the rule into the Global Minimum Tax Act in 2024.
Who has to pay the global minimum tax?
The Canada.ca guidance sets the test on the group, not the company. A qualifying multinational enterprise reports at least €750 million in the consolidated financial statements of its ultimate parent in at least two of the four fiscal years before the year being tested. Below that line, the Act doesn’t apply. Above it, each country where the group operates gets tested.
The CRA page says the Act applies to fiscal years that begin on or after December 31, 2023. So the rule has been live for a while.
What does that mean for a local business? A corner store, a consulting firm or an incorporated professional isn’t in scope, even with a healthy profit. Being a Canadian subsidiary of a big foreign group is a different story, and so is being a Canadian parent with foreign branches.
How does the top-up work?
Simple idea. If a group’s profits in a country are taxed below 15%, someone owes the difference. The Act has two parts. Part 2 is the income inclusion rule, which puts top-up tax on certain people inside qualifying groups. Part 3 is a domestic minimum top-up tax, so that Canada collects the shortfall on Canadian profits itself instead of leaving it to another country.
A rough illustration only. Say a group earns $100 million in a low-tax country and pays 9% there. The gap to 15% is 6 points, about $6 million of top-up on those profits. Real calculations adjust profit and tax through many steps we haven’t modelled, so treat that as the shape of the idea, not a figure to plan around.
| Item | Detail |
|---|---|
| Minimum effective rate | 15% |
| Group revenue test | €750 million in at least 2 of the last 4 years |
| Applies to fiscal years beginning | On or after December 31, 2023 |
| Part 2 | Income inclusion rule |
| Part 3 | Domestic minimum top-up tax |
What do Canadian entities in a big group file?
Where the parent sits decides it. If the ultimate parent is outside Canada, the Canadian entities file either a notification saying the group return went elsewhere, or the full Global Information Return if it didn’t. If the parent is Canadian, the group files the return and any top-up tax returns. In both cases the CRA says an entity with no tax liability under Parts 2 or 3 can be excused from some of this, so read the “who must file” section of the Canada.ca guidance.
The CRA also points to penalty relief for fiscal years that begin before January 1, 2027 and end before July 1, 2028. We haven’t confirmed the exact conditions, and neither should you from a summary. Go to the source.
Short version: if you’re in scope, you already know it.
Where does ordinary corporate tax sit next to it?
Most Canadian corporations stay in the normal system. The federal general rate is 15%, and for a Canadian-controlled private corporation the small business rate is 9% on the first $500,000 of active business income. Add Ontario’s 11.5% general rate and you get 26.5% combined. For the small business rate, Ontario cut its provincial rate on July 1, 2026, so the combined rate for a calendar 2026 year is a derived blend of about 11.7%, not a published figure.
On $300,000 of active business income in Ontario, the corporate tax calculator shows $35,088 of corporate tax in 2026, an average of 11.7%. That’s a long way from any minimum tax debate. Once profit is paid out, owners pay personal tax as well. See the dividend tax calculator for that side, and the income tax calculator if you pay yourself a salary.
Mistakes and limits
The common mistake is thinking every corporation faces a 15% minimum. It doesn’t. Only groups over the revenue test do, and the tax is a top-up on the shortfall, not a new rate on everything.
A second trap is the opposite: a startup owned by a foreign group might assume it’s exempt because the Canadian company is small. The test looks at the whole group. Check the parent’s revenue first. Then check the filing rules.
Our tools are for ordinary corporate and personal tax. They don’t calculate top-up tax, and we don’t offer a Pillar Two estimate. Groups in scope run this through specialist finance teams and the Act’s own definitions. For a related but different rule, see the non-resident buyer tax calculator.
Where the numbers come from
The 15% rate, the €750 million test and the filing structure come from the Canada.ca pages on the Global Minimum Tax Act and its questions and answers. Federal and Ontario corporate rates come from CRA corporation tax pages, and the small business blend for 2026 is our own derived figure. This site isn’t linked to the CRA or any government.
Frequently asked questions
What is the global minimum tax?
It's a 15% minimum effective tax rate on the profits of qualifying multinational groups, set in Canada by the Global Minimum Tax Act.
Does the global minimum tax apply to small businesses?
Generally no. The test is group revenue of at least 750 million euros in two of the last four years.
When did the Global Minimum Tax Act start?
The CRA says it applies to fiscal years beginning on or after December 31, 2023.
What are Parts 2 and 3 of the Act?
Part 2 is the income inclusion rule. Part 3 is a domestic minimum top-up tax on Canadian profits.
What do Canadian entities file?
It depends on the parent. Canadian entities of a foreign group file a notification or the full information return. A Canadian parent files the return and any top-up returns.
- How Canadian income tax works: brackets and credits
How federal and provincial Canadian income tax stack up, what marginal and average rates mean, and how credits and deductions change your bill
Information only. This page is general information, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns or offer tax services, and we have no connection with the CRA, Revenu Québec, any government or any company named on this page. Check the figures that matter with an official source or a qualified professional.