Canadian companies disadvantaged by elimination of interest deductibility on foreign investment



    OTTAWA, Aug. 11 /CNW Telbec/ - Canadian firms trying to grow their
businesses internationally would be disadvantaged by a proposal to eliminate
interest deductibility on offshore investment, the Conference Board argues in
a new briefing, Provide Fair Tax Treatment for Canadian International
Business.
    "Canadian firms need - at the very least - a level-playing field for
investment abroad if they are to take full advantage of global value chains
and foreign affiliates. This should be the key guiding principle for all
reform of international business taxation," said Glen Hodgson, Senior
Vice-President and Chief Economist. "Canada's share of global foreign direct
investment is slipping. In our view, this is not the time to remove interest
deductibility."
    This briefing, which is publicly available at www.e-library.ca, was
submitted to the federal government's Advisory Panel on Canada's System of
International Taxation, chaired by Peter Godsoe.
    In order to compete globally, companies are accelerating their use of
global and regional value chains-they look for the best place to locate
specific activities rather than creating an entire product or service in one
location.
    A large and growing share of international business also takes place
through foreign affiliates instead of through traditional cross-border
channels of trade. Outward foreign direct investment allows Canadian firms to
create foreign affiliates that sell into global markets and diversify their
revenue sources-foreign affiliate sales now top $400 billion annually.
    The briefing is part of the Conference Board's series "Canadian Tax
Reform for Sustainable Prosperity" designed to foster public debate on tax
reform. Previous briefings in the series include: Implement Sustainable
Funding for Canada's Cities; Use Green Taxes and Market Instruments to Reduce
Greenhouse Gas Emissions; and Harmonize Consumption Taxes to Improve Economic
Efficiency.




For further information:

For further information: Brent Dowdall, Media Relations, (613) 526-3090
ext. 448, corpcomm@conferenceboard.ca


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