• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 8/15/2013

Canada - Finance consultations to curb treaty shopping 

August 15: The Department of Finance released a 25-page consultation paper on possible measures to prevent treaty shopping, and invited stakeholders to comment the following seven questions / issues by 3 December 2013.
  • Question 1 - The advantages and disadvantages of a domestic law approach, a treaty based approach, or a combination of both
  • Question 2 - The relative merits of the various approaches to treaty shopping identified by the OECD as well as whether there are other approaches and types of rules to be considered by Canada in evaluating how best to address the problem of treaty shopping
  • Question 3 - Whether a general approach is preferred over a relatively more specific and objective approach
  • Question 4 - Whether a main purpose test, if enacted in domestic tax laws, would be effective in preventing treaty shopping and achieve an acceptable level of certainty for taxpayers
  • Question 5 - Which of the approaches (a main purpose approach or a more specific approach) strikes the best overall balance between effectiveness, certainty and simplicity, and ease of administration
  • Question 6 - (For stakeholders who favour a more specific approach over a main purpose approach) the design of the conditions and the exceptions (e.g., the substantive business operations and derivative benefits exceptions) under a more specific approach as well as any other exceptions that should be considered under this approach with a view to ensuring the measure is effective and applies in a reasonably straightforward manner with predictable outcomes
  • Question 7 - Whether or not a domestic anti-treaty shopping rule should apply if a tax treaty contains a comprehensive anti-treaty shopping rule

Read an August 2013 report prepared by the KPMG member firm in Canada: Canada Launches Consultations to Curb Treaty Shopping

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