The Justin Trudeau-led government has imposed a penalty of over Rs 82 lakh on Infosys in Canada for underpayment of employee health tax. Despite its significant presence in Canada, this penalty will not materially impact Infosys’ operations. It is related to the Employee Health Tax (EHT) in select Canadian provinces.

According to a PTI report, the Justin Trudeau-led Canadian government is penalizing Infosys with over Rs 82 lakh in Canada. The government is imposing a penalty of over 1.34 lakh Canadian dollars on the Indian IT company. Allegedly, Infosys underpaid employee health tax for the year ending December 31, 2020, leading to this penalty.

According to the report, Canada’s Finance Ministry issued an order to Bengaluru-based Infosys last week. The order stated that the company must pay a penalty of 1,34,822.38 Canadian dollars. The penalty is for the alleged underpayment of Employee Health Tax for the year ending December 31, 2020, as noted in the company’s regulatory filing.

Infosys responded to the Canadian penalty by stating that it would not significantly affect the company’s finances, operations, or other activities.

Presence Of Infosys In Canada

Infosys maintains a significant presence in Canada, with multiple office locations across the country, including Alberta, Mississauga in Ontario, Burnaby in British Columbia, and another one in Ottawa, Ontario.

Select Canadian provinces like Ontario and British Columbia impose the Employee Health Tax (EHT) as a mandatory payroll tax on employers. Employers calculate this tax based on different forms of employee compensation such as salaries, bonuses, taxable benefits, and stock options. The main goal of this tax is to help fund healthcare services within the province.

For instance, employers in Ontario must pay the Employee Health Tax (EHT) on the compensation of employees who:
– Work physically at the employer’s permanent establishment in Ontario.
– Are affiliated with the employer’s permanent establishment in Ontario.
– Don’t physically work at any of the employer’s permanent establishments but receive payment from or through an Ontario permanent establishment.

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