UK/Canada Double Taxation Treaty Amendments Announced

by Jason Gorringe, Tax-News.com, London

15 May 2003

A new Protocol to the Double Taxation Convention between the United Kingdom and Canada was signed in London on 7 May 2003 by the UK's Paymaster-General, Dawn Primarolo and the Canadian High Commissioner, His Excellency Mr Mel Cappe. The Protocol amends the Convention by updating provisions on dividends, interest, royalties and pension contributions. It also enhances the exchange of information provisions, in certain areas tightening up the rules against abuse.

Double Taxation Conventions aim to eliminate the double taxation of income or gains arising in one state and paid to residents of another state, which they do by dividing the taxing rights that each treaty partner has under its domestic law over the same income and gains.

They provide additional protection for taxpayers by specific measures combating discrimination in tax treatment. More generally, conventions benefit the taxpayer by ensuring certainty of treatment and, as far as possible, by reducing compliance burdens.

Double taxation conventions also serve to protect the exchequer by including provisions to combat avoidance and evasion - not least by measures providing for the exchange of information between revenue authorities.

The Protocol is available today on the Inland Revenue's web site, and will be published in due course as a schedule to a draft Order in Council and laid before the House of Commons for approval. The Protocol will enter into force when both countries have completed ratification procedures.

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