Canada: Canadian 2017 budget provides update on BEPS

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Canada: Canadian 2017 budget provides update on BEPS

intl-updates-small.jpg
jamal.jpg
maclagan.jpg

Soraya M Jamal

Bill S Maclagan

Canada's 2017 budget gives a clear indication of the Canadian government's commitment to "continue to work with its international partners to ensure a coherent and consistent response to fight tax avoidance".

Budget 2017 notes that the Canadian government has implemented – or is in the process of implementing – various measures that meet the agreed minimum standards under the OECD's BEPS Project, including:

  • Enacting legislation in December 2016 that requires large multinational enterprises to file country-by-country reports for group fiscal years beginning on or after January 1 2016;

  • Participating in the development of the OECD's Multilateral Instrument (MLI) to streamline the implementation of tax treaty-related BEPS recommendations, including those addressing treaty abuse. Budget 2017 indicates that the Canadian government is pursuing signature of the MLI and is undertaking the necessary domestic processes to do so. However, no indication has been given as to which countries Canada is pursuing signature of the MLI with, or which of the many alternative provisions in the MLI Canada is seeking to implement;

  • Trying to improve the mutual agreement procedure in Canada's tax treaties in an effort to promote the effective and timely resolution of treaty-related disputes; and

  • Spontaneously exchanging tax rulings with other tax administrations where such rulings could otherwise give rise to BEPS concerns.

Canada already has robust controlled foreign corporation (CFC) rules and reporting requirements relating to certain tax avoidance transactions. Budget 2017 states that the Canada Revenue Agency already is applying the revised international guidance on transfer pricing by multinational enterprises.

In addition to the foregoing, Budget 2017 confirms that the Canadian government is strengthening its efforts to combat international tax evasion through enhanced sharing of information between tax authorities under the OECD's framework of the Common Reporting Standard (modelled on the US FATCA). In this regard, Canada recently enacted legislation to implement the standard, starting on July 1 2017, which will allow for the first exchanges of information with other countries in 2018.

Aside from the BEPS recommendations, the Canadian government has also announced proposed measures to extend base erosion rules to foreign branches of life insurers that, if enacted, would become effective for taxation years beginning on or after March 22 2017.

While Canada has been active in combatting international tax avoidance and evasion, Budget 2017 serves as a clear indication of the Canadian government's commitment to its continued efforts in this endeavour.

Soraya M Jamal, Partner (soraya.jamal@blakes.com) and Bill S Maclagan, QC, Partner (bill.maclagan@blakes.com), Vancouver

Blake, Cassels & Graydon LLP

Tel: +1 604 631 3300

Fax: +1 604 631 3309

Website: www.blakes.com

more across site & shared bottom lb ros

More from across our site

ITR’s data has highlighted the US firm’s ambition to become America’s ‘premier’ tax player via a concerted partner recruitment strategy
Jaap Zwaan’s arrival continues a recent streak of A&M Tax investing in the region; in other news, the US and Japan struck a deal that significantly lowered tariff rates
In a world where international tax concepts rely on human activity, Leonard Wagenaar poses existential questions about the future of such ideas when AI is ever-present
France v Axa provides a practical illustration of how the burden of proof is applied in TP matters under French law, ITR also heard
In an exclusive interview with ITR, Ian Gary calls for a central public CbCR database and bemoans the US’s lack of involvement in international tax transparency
Reckitt Benckiser is to divest its Essential Home business, which includes more than 70 brands, to private equity firm Advent International
In the first of a new series of weekly opinion pieces, ITR Editor Tom Baker reflects on the OECD’s attempts to sanitise the US’s brazen pillar two negotiations
The threat of 50% tariffs on Brazilian goods coincides with new Brazilian legal powers to adopt retaliatory economic measures, local experts tell ITR
The country’s chancellor appears to have backtracked from previous pillar two scepticism; in other news, Donald Trump threatened Russia with 100% tariffs
In its latest G20 update, the OECD also revealed tense discussions with the US where the ‘significant threat’ of Section 899 was highlighted
Gift this article