Canada Overhauls Transfer Pricing Law in Fiscal 2026 Budget Bill

Canada is overhauling its rules governing intercompany transactions, handing the tax authority greater powers to adjust corporate tax bills.

The reforms increase penalties, tighten deadlines and make various administrative changes to the country’s transfer pricing rules. The changes—included in legislation enacting parts of Canada’s Fiscal 2026 budget that passed March 26—was set in motion after a major courtroom loss neutralized a pillar of the rules.

Tax practitioners have said it marks a significant departure from existing jurisprudence in how transfer prices are determined in the courts, creating uncertainty for firms seeking to ensure they’re compliant with the law.

The Department ...