Competent authorities' agreement
The competent authorities of the United States and Canada have now agreed that Article VII of the treaty, "Business Profits" is to be interpreted to ensure consistency with the conclusions of the OECD's report. Further, all other provisions of the treaty that require a determination of whether an asset or amount is effectively connected or attributable to a permanent establishment must also be interpreted consistently with the report.
The competent authorities also note that they understand that relief of double taxation continues to be subject to the provisions and limitations of each country's domestic law, as provided in Article XXIV, "Elimination of Double Taxation".
This agreement generally applies to taxable years that begin on or after January 1, 2012; however, a taxpayer may choose to apply the entirety of this agreement in both countries for all taxable years beginning after December 31, 2008.
For more information, contact your KPMG adviser.