Corporate Tax Rates and Legislation: Q2 2025 Accounting status

Issue 2 – Q2 2025 Accounting status

• Legislative changes—April 1, 2025, to June 30, 2025
• Accounting updates—April 1, 2025, to June 30, 2025
• Federal and provincial/territorial bills—tabled or received royal assent in 2025
• Corporate income tax rates—accounting status (January 1, 2022 to June 30, 2025)

Legislative changes — April 1 to June 30, 2025

Legislative developments from April 1 to June 30, 2025, that affect income taxes, are outlined below.

Federal election

On April 28, 2025, Canadians re-elected a federal minority Liberal government. The governing Liberal Party of Canada’s election platform did not propose any sweeping corporate income tax rate changes (for more information on tax proposals in the platform, see our Tax Insights “Liberal party tax platform: What it could mean for you and your business”). The federal government is expected to table a 2025 budget in the fall.

Global minimum tax and proposed US tax code section 899

On June 28, 2025, the G7 issued a statement announcing that the members of the G7 have reached a “shared understanding” on global minimum taxes (i.e. the OECD Pillar Two rules) that will:

• allow a “side-by-side” system, in which US tax laws will co-exist with the Pillar Two rules that have been implemented by the other G7 member countries – this system will fully exclude US parented corporate groups from the Income Inclusion Rule (IRR) and the Undertaxed Profits Rule (UTPR) (part of the Pillar Two rules) in respect of both their domestic and foreign profits, in recognition of US minimum tax rules that apply to those groups
• remove proposed US tax code section 899 from the One Big Beautiful Bill Act (the US Bill) that is currently before the US Congress – proposed section 899 is a retaliatory provision to address what the US considers to be “unfair” foreign taxes, by imposing higher taxes (e.g. incrementally increasing withholding tax rates) on taxpayers connected to a foreign country that has enacted taxes considered to be “extraterritorial” (e.g. the UTPR) or “discriminatory” (e.g. a digital services tax); at the request of the US Secretary of the Treasury Board, both Chairmans of the House Ways and Means Committee and the Senate Finance Committee have agreed to remove section 899 from the US Bill

Status: As at June 30, 2025:

• legislation to exempt US parented corporate groups from Canada’s global minimum tax rules has not been tabled as a bill in the House of Commons and therefore this exemption is not considered substantively enacted for Canadian GAAP or enacted for US GAAP
• a final version of the US Bill has not been passed by the US Congress and signed into law  

Digital services tax

On June 29, 2025, the Department of Finance announced that: 

• “Canada would rescind the Digital Services Tax (DST) in anticipation of a mutually beneficial comprehensive trade arrangement with the United States”
• the June 30, 2025 collection of the DST will be halted and that legislation will soon be brought forward to rescind the Digital Services Tax Act (DSTA) 

The DST had become effective the 2024 calendar year and was to apply retroactively to in-scope revenues earned since January 1, 2022. The DST’s first filing deadline for foreign and domestic taxpayers with a DST filing obligation for any of the 2022, 2023 or 2024 calendar years was June 30, 2025. For more information, see our Tax Insights “Canada intends to rescind its Digital Services Tax Act.” 

Status: As at June 30, 2025, legislation to rescind the DSTA has not been tabled as a bill in the House of Commons. For further discussion, please contact your PwC adviser.

Quebec Information Bulletin 2025-4

On June 19, 2025, Quebec’s Ministère des Finances released Information Bulletin 2025-4 “Adjustments to the Québec tax system and harmonization with a federal tax measure.” Among other measures, Information Bulletin 2025-4 modifies the list of territories with low economic vitality for the purpose of the tax credit relating to investment and innovation, and the new tax holiday relating to the carrying out of a large investment project.

Status: As at June 30, 2025, these proposed measures have not been tabled as a bill in the Quebec legislature and therefore are not considered substantively enacted for Canadian GAAP or enacted for US GAAP.

Trade tariffs and government support

United States President Donald Trump continues to issue executive orders that impose tariffs (or alter tariff rates) on certain goods imported from Canada. The Canadian government has responded with a series of retaliatory measures, including imposing its own surtax on a list of US goods, and by providing government support to certain Canadian business sectors. For more information on the current tariff situation and to help your business assess and manage these tariffs, visit our Tariffs and Trade Policy Resource Centre.

Federal, provincial and territorial governments have announced measures intended to support Canadian businesses affected by the tariffs. For tariff-related support programs, see Tariff relief: Unlocking government support.

Provincial/territorial budgets

The following provinces and territories introduced budgets from April 1 to June 30, 2025. Only Prince Edward Island announced changes to general and M&P corporate income tax rates.

• Newfoundland and Labrador - No key changes
• Ontario – See our Tax Insights “2025 Ontario budget: Tax highlights.”
• Prince Edward Island – The province’s general and M&P corporate rate will decrease from 16% to 15% on July 1, 2025.

Status: As at June 30, 2025, Ontario and Prince Edward Island (see Table 1) have tabled legislation to implement certain budget measures. Prince Edward Island’s Bill 21 enacted the province’s July 1, 2025 general and M&P corporate income tax rate decrease to 15% – this rate change is considered substantively enacted for Canadian GAAP as at May 9, 2025 and enacted for US GAAP as at May 16, 2025 (see Table 2).

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Accounting updates — April 1 to June 30, 2025

There were no significant updates relating to the accounting for income tax.

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Federal and provincial/territorial bills 

Table 1 lists key bills that include corporate income tax rate changes or other income tax changes (e.g. for research and development) that were:

• tabled or received royal assent during 2025, or
• tabled before 2025, but did not receive royal assent before 2025

Table 1: Federal and provincial/territorial bills
Bolded rows indicate a change in status from April 1 to June 30, 2025.

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Corporate income tax rates—accounting status (January 1, 2022 to June 30, 2025) 

The following information excludes Canadian-controlled private corporation small business rates and thresholds.

Table 2: Corporate income tax rates—accounting status
Bolded rows indicate a change in status from April 1 to June 30, 2025.

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