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- Title
IS THE BACK-TO-BACK WITHHOLDING TAX REGIME AN EFFECTIVE ANTI-TREATY-SHOPPING MEASURE?
- Authors
Bradley, Ian; Kwan, Denny; Wang, Dian
- Abstract
The Canadian government has expressed a firm desire to prevent treaty-shopping arrangements. The new back-to-back withholding tax regime effectively acts as an anti-treaty-shopping measure for certain deductible payments by Canadian payers to non-residents. This regime mainly operates through the application of mechanical tests, in contrast to purpose-based anti-treaty-shopping rules that have been proposed in other contexts. Accordingly, the back-to-back rules may apply somewhat more predictably than a purpose-based rule; however, they could still result in significant uncertainty and administrative burdens. The absence of a general purpose test could also cause the back-to-back rules to capture many ordinary commercial arrangements. This article reviews the operation of the new back-to-back regime as an anti-treatyshopping measure and suggests limited modifications that should be considered to increase the effectiveness of the rules and prevent the denial of treaty benefits in inappropriate circumstances.
- Subjects
CANADIAN politics &; government; TAXATION
- Publication
Canadian Tax Journal / Revue Fiscale Canadienne, 2016, Vol 64, Issue 4, p833
- ISSN
0008-5111
- Publication type
Article