TORONTO, Sept. 2 /CNW/ - While Canada is making progress in reducing
taxes as a barrier to crossborder investment between Canada and the United
States, further efforts are required, according to a report released today by
the C.D. Howe Institute. In Finding Silver Linings in the Storm: An Evaluation
of Recent Canada-US Crossborder Tax Developments, Arthur J. Cockfield,
Associate Professor of Law, Queen's University assesses current initiatives
aimed at ensuring that tax does not unduly inhibit entrepreneurial
initiatives, and recommends further action.
Recently, notes Cockfield, a storm of activity has swirled around rules
governing the tax treatment of Canada-US crossborder investment. One new
development concerns revisions to the Canada-US tax treaty - including the
abolition of crossborder withholding tax rates for interest payments, the
provision of treaty benefits for members of limited liability companies.
Another important development concerns efforts by Ottawa to engage in
corporate income tax competition with the United States and to inhibit certain
aggressive crossborder tax-planning structures. Professor Cockfield argues
that further reform efforts should include: eliminating tax rules that unduly
discriminate against the interests of US investors; eliminating withholding
taxes on crossborder parent/subsidiary dividends; changing domestic group
taxation laws; and enhancing administrative cooperation between the two
countries' tax authorities to reduce compliance costs for firms with
operations in both countries, including the development of a case-by-case
approval process for tax relief for crossborder mergers and acquisitions.
The high degree of integration of the Canadian and US economies, he says,
means that the effects of such tax changes can be significant and beneficial.
For the report, go to www.cdhowe.org.
For further information:
For further information: Arthur J. Cockfield, Associate Professor,
Faculty of Law, Queen's University; Colin Busby, Policy Analyst, C.D. Howe
Institute, (416) 865-1904, firstname.lastname@example.org