In March 2017 – more than 3,000 days ago – Lavery established its Artificial Intelligence Legal Lab to study and, above all, anticipate developments in artificial intelligence. Quite innovative at the time, the goal of Lab was to position itself ahead of the legal complexities that artificial intelligence would bring for our clients. The number of developments in the field of AI since that date is astonishing. On May 19, 2025, Alexandre Sirois wondered in an article in La Presse[1] whether Montreal was still a leading hub for AI. He notably raised the question in the context of major AI investments made in recent years in other jurisdictions, citing, for instance, France, Germany, and Singapore. This timely question prompts reflection – have the massive research and development efforts and investments made in Quebec and Canada effectively translated into commercial advancements for the benefit of Canadian businesses, institutions, and customers? In other words, are we successfully transitioning from R&D in the field of AI to the production, commercialization, and industrialization of products and services in Canada that are highly distinctive, innovative, or competitive on the international scene? Does the legislative framework in Quebec and Canada sufficiently support technological advancements resulting from our AI investments, while also showcasing and maximizing the outcomes derived from the exceptional human talent present in our universities, research groups, institutions, and companies? As important as it is to protect privacy, personal information, data, and the public in general in the context of AI use, it is equally important to enable our entrepreneurs, start-ups, businesses, and institutions to strategically position themselves advantageously in this field – potentially the deciding factor between a prosperous society and one lagging behind others. At the other end of the spectrum, in The Technological Republic: Hard Power, Soft Belief, and the Future of the West, Alexander C. Karp and Nicholas W. Zamiska reflect on various topics involving technology, governance, and global power dynamics. They highlight concerns about the geopolitical consequences of technological complacency, notably criticizing major technology companies (mostly based in Silicon Valley) for developing AI technology with a focus on short-term gains rather than long-term innovation. They argue that these companies prioritize trivial applications, such as social media algorithms and e-commerce platforms, which serve as distractions from addressing critical societal challenges, instead of aligning with national or global human interests. From a Canadian legal perspective, this is both fascinating and thought-provoking. Amidst the swift evolution of international commercial relations, what pivotal role will Canada, and notably its innovative entrepreneurs, businesses, institutions, cutting-edge universities, and renowned groups, play in shaping our future? Can they seize their rightful place and lead the charge in the relentless march of future developments? In this context, is regulating AI from a national perspective the strategic and logical road to follow, or could an excess of regulations stifle Canadian businesses and entrepreneurs, hindering our chances in the high-stakes AI race? The head of Google’s Deepmind, Demis Hassabis, recently stated that greater international cooperation around AI regulation was needed, although this would be difficult to achieve given today’s geopolitical context[2]. Obviously, there is fierce competition on the global stage to come out on top in AI, and as in all areas or industrial revolutions where the potential for economic and social development is extraordinary, the degree of regulation and oversight can cause some countries and companies to take the lead (sometimes at the expense of the environment or human rights). Reflection on the subject, however necessary, must not lead to inaction. And proactivity with regard to artificial intelligence must not lead to negligence or carelessness.   We operate in a competitive world where the rules of engagement are far from universal. Even with the best intentions, we can unintentionally embrace technological solutions that conflict with our core values and long-term interests. Once such solutions gain a foothold, they become hard to remove. Recently, various applications have drawn attention for their data-collection practices and potential links to external entities, illustrating how swiftly popular platforms can become national debates over values, governance, and security. Even when these platforms have demonstrated links to foreign or hostile entities, they are hard to dislodge. In May 2025, after months spent pursuing a plan to convert itself into a for-profit business, OpenAI, Inc. decided to remain under the control of a non-profit organization[3]. Headquartered in California, OpenAI, Inc. aims to develop safe and beneficial artificial general intelligence (AGI), which it defines as “highly autonomous systems that outperform humans at most economically valuable work[4].” This decision followed a series of criticisms and legal challenges accusing OpenAI of drifting from its original mission of developing AI for the benefit of humanity. Bill C-27, known as the Digital Charter Implementation Act, 2022, was a legislative proposal in Canada aiming to overhaul federal privacy laws and introduce regulations for artificial intelligence (AI). It encompassed three primary components, including the Artificial Intelligence and Data Act (AIDA), intended to regulate the development and deployment of high-impact AI systems. This Act[5] would have required organizations to implement measures to identify, assess, and mitigate risks associated with AI, including potential harms and biases. It also proposed the establishment of an AI and Data Commissioner to support enforcement and outlined criminal penalties for the misuse of AI technologies. In addition, the Act would have established prohibitions related to the possession or use of personal information obtained illegally for designing, developing, using, or making available an AI system, as well as prohibitions against making available an AI system whose use causes serious harm to individuals. The failure to enact Bill C-27 left Canada’s federal privacy laws and AI regulations unchanged, maintaining the status quo established under PIPEDA and other general rules of civil and common law, as well as the Canadian Charter of Rights and Freedoms. This outcome has implications for Canada’s alignment with international privacy standards and its approach to AI governance. Stakeholders have expressed concerns about the adequacy of existing laws in addressing contemporary digital challenges and the potential impact on Canada’s global standing in data protection and AI innovation. In the current international context, advancements in artificial intelligence are set to be widespread in fields such as the military, healthcare, finance, aerospace, resource utilization, and, of course, law and justice. So, with AI, what direction do we take from here? We have the choice between deciding for ourselves – by strategically aligning our investments, R&D, and the efforts of our entrepreneurs – or allowing technological advancements, largely driven abroad, to determine our path forward.   [1] On a posé la question pour vous | Montréal est-il encore une plaque tournante en IA ? | La Presse [2] Google Deepmind CEO Says Global AI Cooperation 'Difficult' - Barron's [3] OpenAI reverses course and says its nonprofit will continue to control its business | Financial Post [4] The OpenAI Drama: What Is AGI And Why Should You Care? [5] The Artificial Intelligence and Data Act (AIDA) – Companion document

In this bulletin, we will be discussing the TCEB as part of our series on the 2025 Quebec budget and corporate taxation. This particular tax credit aims to boost innovation and competitiveness in the digital marketplace by providing strategic tax assistance to businesses specializing in information and communication technologies. It was introduced to spur the growth of Quebec’s technology sectors through tax incentives granted to companies developing or integrating e-business solutions.  Before the 2025 Quebec budget reform, the TCEB comprised a 24% refundable tax credit, coupled with a 6% non-refundable tax credit. In 2024, the government began adjusting TCEB rates as part of the updated economic priorities, gradually reducing the refundable credit to 20% by 2028 and increasing the non-refundable credit to 10%. New adjustments were announced in the 2025 provincial budget to ensure that the incentives align more closely with the changing technological landscape, in particular by shifting the focus to the integration of recent emerging technologies, such as artificial intelligence (AI) and data processing and hosting. The new rules provide that only activities that incorporate artificial intelligence functionalities in a significant way will be eligible for the TCEB going forward. In addition, data processing and hosting services (NAICS 51821) have been added to the list of eligible activities, which shows the increasingly important role they play in today’s technological landscape. However, activities aimed at maintaining or upgrading information systems and technological infrastructure have been removed from the list, refocusing the program on cutting-edge technologies. Businesses engaged in inter-company outsourcing, mainly with subsidiaries of foreign companies, are particularly affected by the changes, in that credit rates will be reduced by half if the proportion of such outsourcing reaches 50% or more. The idea is to encourage those businesses to contribute more directly to the local economy and technological innovation in Quebec. The changes will apply to tax years beginning after December 31, 2025, but companies have the option of electing to apply them to tax years beginning after the budget presentation, provided the election is made before the end of the ninth month following the deadline by which they are required to file their tax returns. Read our first bulletin on the 2025 provincial budget titled “Provincial Budget 2025: New Refundable Tax Credit for Research, Innovation and Commercialization (CRIC)”