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 ensure that every taxpayer pays their fair share of taxes.
Since March 29, 2012:
- 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 Liechtenstein and Uruguay have been signed.
Canada now 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.
Furthermore, Canada now has 16 TIEAs in force, 2 TIEAs signed but not yet in force, and 12 TIEAs under negotiation.