Tax Treaties and Tax Information Exchange Agreements

Through Canada’s Economic Action Plan, the federal government is committed to combating international tax evasion and to ensuring tax fairness by implementing the standard developed by the Organisation for Economic Co-operation and Development (OECD) for the effective exchange of tax information. Consistent with this commitment, in addition to concluding tax treaties, the Government seeks to conclude tax information exchange agreements (TIEAs) with jurisdictions with which Canada does not have a tax treaty.

About the Initiative

The Government is actively negotiating and concluding tax treaties to reduce tax barriers to international trade and investment, strengthen Canada’s bilateral economic relationships, and create enhanced opportunities for Canadian businesses abroad. The Government is committed to combating international tax evasion and to ensuring tax fairness by implementing the standard developed by the OECD for the effective exchange of tax information. In Budget 2007, the Government extended the exemption for dividends received out of active business income earned by foreign affiliates resident in tax treaty countries to also include active business income earned by foreign affiliates established in a jurisdiction that has agreed to a TIEA with Canada. This provided non-tax treaty jurisdictions an incentive to enter into TIEAs with Canada.

Who Will Benefit

By reducing tax barriers, tax treaties support and encourage international trade and investment. They are therefore beneficial for the Canadian economy and Canadian businesses. By providing for the effective exchange of tax information, tax treaties and TIEAs assist the Canada Revenue Agency in combating international tax evasion. In this regard, tax treaties and TIEAs are beneficial for all Canadians, as they support efforts to ensure that every taxpayer pays their fair share of taxes.

Initiative Update

Economic Action Plan 2012 and as of June 24, 2013:

  • A new tax treaty with Colombia and a protocol with Singapore have come into force.
  • New tax treaties with Hong Kong and Serbia, and updated tax treaties with New Zealand and Poland, have been signed.
  • A protocol to update the tax treaty with Luxembourg has been signed.
  • An agreement modifying the interpretative protocol of the Canada-Switzerland tax treaty to ensure the consistency of Article 25 of the treaty with the OECD standard has been signed.
  • Negotiations to update the tax treaty with Australia have been announced.
  • TIEAs with Aruba, Costa Rica and Saint Lucia have come into force.
  • TIEAs with Bahrain, the British Virgin Islands, Brunei, Liechtenstein, Panama and Uruguay have been signed.
  • On June 19, 2013, Bill S-17, the Tax Conventions Implementation Act, 2013, which implements the tax treaties signed with Namibia, Hong Kong, Poland and Serbia, the protocol signed with Luxembourg and the agreement signed with Switzerland, was enacted. This means that Canada is now in a position to take the steps necessary to ratify these agreements.
  • Economic Action Plan 2013 announced the Government’s intention to consult on possible measures that would protect the integrity of Canada’s tax treaties while preserving a business tax environment that is conducive to foreign investment. A consultation paper is expected to be launched in 2013 to provide an early opportunity so that stakeholders may comment on possible measures.
Canada currently has 90 tax treaties in force, 11 new or revised tax treaties signed but not yet in force, and 8 new or revised tax treaties under negotiation. Canada also has 16 TIEAs in force, 6 TIEAs signed but not yet in force, and 8 TIEAs under negotiation.

Find Out More

For more information, please visit the web pages for Notices of Tax Treaty Developments and for Tax Information Exchange Agreements on the Department of Finance Canada website.

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