13. April 2021
Taiwan Canada Tax Agreement
Canada and Taiwan have signed a double taxation agreement (DBA) that limits withholding tax on income from dividends, interest and royalties and provides for the exchange of tax information. 4 The competent authorities of the territories endeavour to resolve by mutual agreement any difficulty or doubt as to the interpretation or application of the convention. For political and legal reasons beyond the scope of this document, Canada and Taiwan have formally characterized the treaty as an „agreement“ and not a „convention,“ „convention“ or „treaty.“ These political and legal reasons also appear to have influenced the text of the treaty in many respects. For example, the treaty does not define the term „Canada“ but defines it as „territory“ and defines it as the geographic area in which the Canada Revenue Agency („CRA“) exercises jurisdiction. Despite these nuances, the regulations seem to have the practical effect of a typical tax treaty and we have chosen to call it as such in this article. On January 15, 2016, after 16 years of negotiations, the Trade and Economic Offices of Canada and Taiwan signed a tax agreement (the „treaty“). The treaty could have a significant impact on many individuals and businesses, both in Canada and in Taiwan. The purpose of this article is to provide a brief summary of key provisions of the treaty that will be of interest to residents of Canada or Taiwan who have or are considering personal or economic activity in the other territory. The first half of the article examines the main „distribution rules“ of the treaty, which divide the taxing rights of the respective income streams between the two territories. The second half of the article deals with some of the specific provisions of the treaty, such as transfer prices, exchange of information, procedures for mutual agreement, dual stay and limitation of benefits.
The Canadian Department of Finance announced that the agreement was signed in Taipei on January 15, 2016.