Canada - Treaty shopping consultation 

December 18: Foreign-based multinationals and foreign corporations investing in or through Canada will want to closely follow developments now that the Department of Finance has ended its formal consultations on possible measures to combat “treaty shopping” abuses and the related erosion of Canada’s tax base.

As signaled in the March 2013 federal budget, the Department of Finance in August 2013 released a 25-page discussion paper titled Consultation Paper on Treaty Shopping — The Problem and Possible Solutions.

Finance asked interested parties to provide input during a four-month consultation period ending 13 December 2013 before it decides on a course of action.

Final proposal possible in 2014

It seems clear that Finance perceives treaty shopping to be a significant problem that erodes Canada’s tax base. While measures to curb treaty shopping will almost certainly be tightened, their precise form remains unclear. The government’s final proposal could appear sometime in 2014, perhaps as early as the 2014 federal budget.

Read a December 2013 report [PDF 52 KB] prepared by the KPMG member firm in Canada: New Treaty Shopping Rules — Should Canada “Wait and See”?

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