All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

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 & bottom lb ros

More from across our site

This week Brazil’s former President Luiz Inacio Lula da Silva came out in support of uniting Brazil’s consumption taxes into one VAT regime, while the US Senate approved a corporate minimum tax rate.
The Dutch TP decree marks a turn in the Netherlands as the country aligns its tax policies with OECD standards over claims it is a tax haven.
Gorka Echevarria talks to reporter Siqalane Taho about how inflation, e-invoicing and technology are affecting the laser printing firm in a post-COVID world.
Tax directors have called on companies to better secure their data as they generate ever-increasing amounts of information due to greater government scrutiny.
Incoming amendments to the treaty could increase costs on non-resident Indian service providers.
Experts say the proposed minimum tax does not align with the OECD’s pillar two regime and risks other countries pulling out.
The Malawian government has targeted US gemstone miner Columbia Gem House, while Amgen has successfully consolidated two separate tax disputes with the Internal Revenue Service.
ITR's latest quarterly PDF is now live, leading on the rise of tax technology.
ITR is delighted to reveal all the shortlisted firms, teams, and practitioners for the 2022 Americas Tax Awards – winners to be announced on September 22
‘Care’ is the operative word as HMRC seeks to clamp down on transfer pricing breaches next year.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree