Canada Signs Revised Tax Information Exchange Agreement

by Mike Godfrey, Tax-News.com, Washington

09 November 2011

Canada has signed the updated Convention on Mutual Administrative Assistance in Tax Matters, Finance Minister Jim Flaherty has announced.

Canada's Finance Minister Jim Flaherty signed the amended agreement during the recent G20 Summit in France, after which he said: “This updated international Convention will help Canada and other countries combat cross-border tax evasion through enhanced information sharing. A secure tax base contributes significantly to a sound economy, which is more important than ever in these challenging economic times.”

According to Flaherty's department, the amended Convention is consistent with Canada’s international efforts to strengthen tax co-operation through the effective exchange of tax information. It also addresses a call by G-20 Leaders at the Toronto Summit in June 2010 for the development of a multilateral mechanism for tax information exchange that is open to all countries.

The Convention will enter into force in Canada once it has been tabled in parliament and ratified.

The Convention and the Protocol amending it were developed jointly by the Council of Europe and the Organization for Economic Co-operation and Development.

It aims at the creation of a network for mutual administrative assistance in tax matters between signatory countries. The treaty is intended to promote international co-operation between tax authorities to improve the application of the domestic tax laws of the signatory countries, while respecting the rights of taxpayers, such as the protection of the confidentiality of their information.

The Convention was recently updated to ensure that bank secrecy laws or domestic tax interest requirements do not prevent a country from exchanging information for tax purposes, thus making it a more efficient tool in combating international tax evasion.

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