Taxation of multinationals | Tax confrontation in sight with Washington?

After the tariff threat, the specter of a tax war? Courtesy of American President Donald Trump, Washington is preparing sanctions in what is intended to be a warning to Canada, member countries of the European Union and other signatories to an international tax pact.

The 47^e tenant of the White House did not just withdraw the United States from an OECD agreement allowing the establishment of a minimum tax of 15% on the profits of large companies – in particular large American multinationals.

In the plethora of executive orders signed in the wake of his swearing in, he ordered the US Department of the Treasury to put in place a “list of options” for protectionist measures if it were concluded that countries were exaggerating position of American multinationals on the question of taxation and taxes.

The contents of the document signed by President Trump offer few details on what happens next. It mentions the study of countries “likely to implement tax rules” which “disproportionately affect American companies”. The other certainty: the recommendations of the Treasury Department must be sent to it within 60 days. The next two months could therefore hold some surprises.

“How much will people believe it? Are we going to react by doing what he asks? Could this trigger a trade war? These are situations that are not currently impossible,” summarizes full professor in the accounting sciences department at HEC Montréal Jean-Pierre Vidal.

Two-pronged

This withdrawal by the United States concerns the agreement which has 140 signatories, including Canada. The treaty has two pillars.

The first should allow nations to tax multinationals that generate significant revenues on its territory without having a physical presence there, for example by offering digital services. We can think of multinationals like Google, Facebook, Apple and Microsoft.

Under the second pillar, countries agree to tax the profits of all large companies with revenues above US$1 billion at a rate of 15%, everywhere in the world.

This component is progressing faster than the first pillar, which essentially targets digital giants. It officially came into force in a few countries, including Canada, in 2024. Regarding the component on large technological multinationals, there is still no international consensus on a single formula.

Result: countries like Canada have decided to move forward with their own 3% tax. Domestically, the measure was adopted by Ottawa in June 2024, which sparked opposition from professional associations and business groups south of the border.

“Mr. Trump does not mention the tax on digital services, but I understand that this would be covered by what will be studied in the United States,” underlines Lyne Latulippe, principal researcher at the Chair in Taxation and Public Finance at the University of Sherbrooke.

Favorable, but not a member

If the United States had signed international reform in 2021 while Democrat Joe Biden was in power, nothing had yet materialized south of the border, recalls M^me Latulippe.

“There were commitments, but nothing had been implemented,” she said. It was a signal to continue collaborating. The decree [du président Trump] seems to signal the end of cooperation. »

Difficult to know what will emerge from the work of the Treasury Department over the coming weeks, recognizes M^me Latulippe. One thing is certain, Washington is sending a clear signal, believes the specialist.

“We will keep an eye on this file,” says the researcher. It was already a little in the air. We will see, but what would the measures be? Will this fuel the threat of tariffs? Maybe, because I don’t know what protectionist measures could be put in place. »

This is not the first time that this type of tax measure has been in the sights of the American president. In 2019, during his first term, Mr. Trump found himself at the heart of a clash with France, which had put forward its own digital tax project.

Believing that the measure would affect the large American technology multinationals Alphabet, Apple and Facebook, the billionaire had threatened France to impose customs tariffs on products such as French wine.