Consultation on Defending Canadian Businesses Against Foreign Tax Credit Restrictions

Current status: Closed

In Budget 2023, the government committed to consult on the possibility to introduce reciprocal treatment in light of some eligibility conditions associated with certain tax credits under the U.S. Inflation Reduction Act. These consultations seek to ensure that Canadian businesses and their workers can thrive in the clean economy by informing potential measures that would respond to any potential protectionist practices that may arise in other countries' tax credits.

This engagement process gave all interested members of the public the opportunity to provide input on this topic. The consultation ran from October 5, 2023 to November 17,  2023. Thank you to everyone who participated.

Key questions for consideration

This consultation sought feedback on the following key questions:

1. Some countries have included domestic content requirements in their clean economy tax credits. Would it be appropriate for Canada in this instance to implement reciprocal measures for foreign companies doing business in Canada? If so, please:
   1. Explain and provide details on the extent of the impact of foreign protectionist practices on Canadian businesses; and,
   2. Indicate ways in which you think the federal government could best support Canadian businesses in the face of protectionist practices abroad.

2. Would you be in favour of introducing reciprocal treatment in Canada's Clean Electricity Investment Tax Credit and Clean Technology Investment Tax Credit?

   For instance, Canada could apply reciprocal treatment to goods from any country that either through explicit measures, such as content requirements, or implicit measures, such as unequal regulatory requirements, treats Canadian products differently from those produced in their domestic market.

   1. What would be the impact of such reciprocal treatment measures by Canada on Canadian business?
   2. Is this an appropriate approach to address the issue?
   3. Please identify known discriminatory measures in other countries, as well as impacts on Canadian business.
3. Are there any international trade considerations (e.g., impact on imports or exports, trade obligations) you would like to bring to our attention? Please provide details.

What’s next?

Input received through this consultation will be considered alongside the analysis departmental officials are conducting as part of the ongoing work on the Clean Electricity Investment Tax Credit and Clean Technology Investment Tax Credit. While this formal consultation has now concluded, Canadians are welcome to share their ideas and comments with the Department of Finance at any time.

Related links

• Fall Economic Statement 2022
• Budget 2023—A Made-in-Canada Plan: Strong Middle Class, Affordable Economy, Healthy Future
• Government consults Canadians on Budget 2023 measures to grow the clean economy, close tax loopholes, and deliver tax relief for Canadians