Back-to-Back withholding loan rules and their anti-treaty shopping effect in Canada
La Ley del Impuesto sobre la Renta suele imponer retenciones en el origen. El artículo 11 de los tratados fiscales canadienses permite a Canadá gravar los intereses que surgen en el país y se pagan a los residentes del otro país del tratado a una tasa reducida del 10 % o 15 % de la tasa legal que de otro modo podría aplicarse. Exclusivamente, según el tratado entre Canadá y Estados Unidos, no se aplica ningún impuesto de retención canadiense a los intereses sobre deudas no realizadas en condiciones de plena competencia, por ejemplo, cuando una subsidiaria canadiense paga intereses sobre dinero prestado de su empresa matriz estadounidense. Sin embargo, como los tratados tienen por objeto proporcionar beneficios fiscales solo a los residentes... Ver más
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Back-to-Back withholding loan rules and their anti-treaty shopping effect in Canada (Treaty shopping arrangements) Jinyan Li, Joanne Magee & J Scott Wilkie, Principles of Canadian Income Tax Law, 10th ed (Toronto, Thomson Reuters, 2022). Jinyan Li, Arthur Cockfield, & J. Scott Wilkie, International Taxation in Canada, 4th ed. (Toronto, LexisNexis Canada, 2018). Organisation for Economic Co-operation and Development, “Multilateral Convention To Implement Tax Treaty Related Measures To Prevent BEPS” Paris: OECE, November 24, 2016). Organisation for Economic Co-operation and Development, Preventing the Granting of Treaty Benefits in Inappropriate Circumstances, Action 6—2015 Final Report (Paris: OECD, October 5,2015). Canada v. MIL (Investments) SA [2007] FCA 236; aff’g. 2006 TCC 460. Alta Energy Luxembourg SARL v. The Queen, 2018 TCC 152; aff’d. 2021 SCC 49. Velcro Canada Inc. v. Canada, [2012] T.C.J. No. 49, [2012] 4 C.T.C. 2029, 2012D.T.C. 1100 (T.C.C.). Andrew Spiro and Shavone Bazarkewich, Specified Right: Back-to-Back Shareholder Loans, 2018 26:1 Canadian Tax Highlights 8-9. (Effect of intermediation) Lehigh Cement Ltd. v. Canada, [2010] F.C.J. No. 658, [2010] 5 C.T.C. 5081,2010 D.T.C. 5081 (F.C.A.). Prévost Car Inc. v. Canada [2009] FCA 57; aff’g. 2008 TCC 231. Velcro Canada Inc. v. Canada, [2012] T.C.J. No. 49, [2012] 4 C.T.C. 2029, 2012D.T.C. 1100 (T.C.C.). Canada v. MIL (Investments) SA [2007] FCA 236; aff’g. 2006 TCC 460 Canada Trustco Mortgage Co. v. Canada, [2005] 5 C.T.C. 215 (S.C.C.) 2005 D.T.C. 5523, at para 75. Amanda Heale, Simplifying the Taxation of Inbound Investment, 2020 Conference Report (Toronto: Canadian Tax Foundation, 2020) 12: 1-23. David G. Duff, Tax Treaty Abuse and the Principal Purpose Test—Part 1, International Tax Planning feature, 2018 66:3 Canadian Tax Journal 619-677. (Meaning of interest) England and Wales Court of Appeal in Pike v. Revenue and Customs Commissioners, [2014] EWCA Civ. 824 at para. 18(C.A.). http://purl.org/coar/resource_type/c_6501 Text http://purl.org/coar/access_right/c_abf2 info:eu-repo/semantics/openAccess http://purl.org/coar/version/c_970fb48d4fbd8a85 info:eu-repo/semantics/publishedVersion http://purl.org/redcol/resource_type/ARTREF info:eu-repo/semantics/article Eric Hamelin, A Tax Court Dissent on Subsection 84(2) Current Cases feature, 2022 70:3 Canadian Tax Journal 666-84. Taylor Cao and Annika Wang, Introduction to Inbound Investments in Canada, in 2021 YP Focus Virtual Conference (Toronto: Canadian Tax Foundation, 2021), 2: 1-59. Nik Diksic and Sabrina Wong, Cross-Border Lending Practices, in Report of the Proceedings of the 69th Tax Conference, 2017 Conference Report (Toronto: Canadian Tax Foundation, 2018), 21:1-29. Steve Marshall and Craig Maurice, Advising on Inbound Investment, in 2022 Prairie Provinces Tax Conference, (Toronto: Canadian Tax Foundation, 2022), 9: 1-100. Jason Boland and Christopher Montes, A Detailed Review of the Back-to-Back Loan Rules, in Report of Proceedings of the Sixty-Eighth Tax Conference, 2016 Conference Report (Toronto: Canadian Tax Foundation, 2017), 26:1-32. Nik Diksic and Sabrina Wong, Cross-Border Lending Practices, in Report of the Proceedings of the 69th Tax Conference, 2017 Conference Report (Toronto: Canadian Tax Foundation, 2018), 21:1-29. Marlene Cepparo, Specified Right and Back-to-Back Shareholder Loans, 2018 26:2 Canadian Tax Highlights 8-9. Ian Bradley, Denny Kwan, and Dian Wang Are the Back-to-Back Withholding Tax Regime an Effective Anti-Treaty-Shopping Measure? International Tax Planning feature, 2016 64:4 Canadian Tax Journal 833-858. Inland Revenue Commissioners v. Duke of Westminster, (1935) [1936] A.C. 1 (H.L.). (Back-to-Back Loans) Income Tax Act, RSC 1985 (5th Supplement), [ITA 1985], ss 212(3.1) and (3.2). text/html La Ley del Impuesto sobre la Renta suele imponer retenciones en el origen. El artículo 11 de los tratados fiscales canadienses permite a Canadá gravar los intereses que surgen en el país y se pagan a los residentes del otro país del tratado a una tasa reducida del 10 % o 15 % de la tasa legal que de otro modo podría aplicarse. Exclusivamente, según el tratado entre Canadá y Estados Unidos, no se aplica ningún impuesto de retención canadiense a los intereses sobre deudas no realizadas en condiciones de plena competencia, por ejemplo, cuando una subsidiaria canadiense paga intereses sobre dinero prestado de su empresa matriz estadounidense. Sin embargo, como los tratados tienen por objeto proporcionar beneficios fiscales solo a los residentes de los países del tratado, los residentes de terceros países, por ejemplo, la matriz de una empresa multinacional en un tercer país, podrían tratar de concertar transacciones de préstamo indirectamente a través de los Estados Unidos o quizás otros países calificar para beneficios del tratado que de otro modo no estarían disponibles con un préstamo directo del prestamista final o de algún otro miembro de la familia corporativa. A esto a menudo se le llama “compra de tratados”, estructurando préstamos para reducir la retención de impuestos a la tasa más baja posible del tratado fiscal. Estos acuerdos generalmente pueden y con frecuencia implican la interposición de un intermediario financiero no residente ubicado en una jurisdicción con un tratado fiscal entre un contribuyente canadiense y un residente de una jurisdicción sin un tratado fiscal para reducir la retención de impuestos que se aplicaría si se otorgara un préstamo y se pagaran los intereses. sobre el préstamo directamente. Como respuesta, las subsecciones 212(3.1) y 212(3.2) de la ITA establecen reglas objetivas específicas para abordar acuerdos de préstamos consecutivos a través de esquemas de compra de tratados, en sintonía con las características comerciales comunes de las transacciones de préstamos comerciales y los intereses de los inversores genuinos. participantes interesados en ellos. Díaz, Juan Carlos préstamos consecutivos, normas contra la elusión de tratados, Canadá préstamos executados, normas contra a elusão de tratados, Canadá 24 Núm. 24 , Año 2024 : Enero-Junio Artículo de revista application/pdf Publication Centro de Estudios Fiscales https://revistas.uexternado.edu.co/index.php/fiscal/article/view/9167 Esta obra está bajo una licencia internacional Creative Commons Atribución-NoComercial-CompartirIgual 4.0. Juan Carlos Díaz - 2023 Revista de Derecho Fiscal Español http://creativecommons.org/licenses/by-nc-sa/4.0 Canada The Income Tax Act imposes withholding tax typically; article 11 of Canadian tax treaties allow Canada to tax interest arising in Canada and paid to residents of the other treaty country at a reduced rate of 10 or 15 percent from the statutory rate that could otherwise apply. Exclusively, under Canada-United States Treaty, no Canadian withholding tax applies to interest on non-arm’s length debt, for example, when a Canadian subsidiary pays interest on money borrowed from its U.S. parent corporation. Nevertheless, as treaties are intended to provide tax benefits only to residents of the treaty countries, residents of third countries, for example, the parent of a multinational enterprise in a third country, might seek to arrange lending transactions indirectly through the United States or perhaps other countries to qualify for treaty benefits that would not otherwise be available on a direct loan from the ultimate lender or some other member of the corporate family. This is often called “treaty shopping,” structuring loans to reduce the withholding tax to the least possible tax treaty rate. These arrangements generally may and frequently involve interposing a non-resident financial intermediary located in a tax treaty jurisdiction between a Canadian taxpayer and a resident of a nonta treaty jurisdiction to reduce the withholding tax that would apply if a loan were made and interest paid on the loan directly. As a response, subsections 212(3.1) and 212(3.2) of the ITA provide specific objective rules to address back-to-back loan arrangements through treaty shopping schemes, attuned to the common commercial characteristics of commercial lending transactions and the interests of genuine self-interested participants in them. Journal article Back-to-Back withholding loan rules and their anti-treaty shopping effect in Canada Consecutive Loans, Norms Against Treaty Elusion, 2346-2434 183 161 2023-12-07T11:46:24Z 2023-12-07 1692-6722 https://revistas.uexternado.edu.co/index.php/fiscal/article/download/9167/15672 https://revistas.uexternado.edu.co/index.php/fiscal/article/download/9167/15671 https://doi.org/10.18601/16926722.n24.08 10.18601/16926722.n24.08 2023-12-07T11:46:24Z |
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Revista de Derecho Fiscal |
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Back-to-Back withholding loan rules and their anti-treaty shopping effect in Canada |
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Back-to-Back withholding loan rules and their anti-treaty shopping effect in Canada Díaz, Juan Carlos préstamos consecutivos, normas contra la elusión de tratados, Canadá préstamos executados, normas contra a elusão de tratados, Canadá Canada Consecutive Loans, Norms Against Treaty Elusion, |
| title_short |
Back-to-Back withholding loan rules and their anti-treaty shopping effect in Canada |
| title_full |
Back-to-Back withholding loan rules and their anti-treaty shopping effect in Canada |
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Back-to-Back withholding loan rules and their anti-treaty shopping effect in Canada |
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Back-to-Back withholding loan rules and their anti-treaty shopping effect in Canada |
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back-to-back withholding loan rules and their anti-treaty shopping effect in canada |
| title_eng |
Back-to-Back withholding loan rules and their anti-treaty shopping effect in Canada |
| description |
La Ley del Impuesto sobre la Renta suele imponer retenciones en el origen. El artículo 11 de los tratados fiscales canadienses permite a Canadá gravar los intereses que surgen en el país y se pagan a los residentes del otro país del tratado a una tasa reducida del 10 % o 15 % de la tasa legal que de otro modo podría aplicarse. Exclusivamente, según el tratado entre Canadá y Estados Unidos, no se aplica ningún impuesto de retención canadiense a los intereses sobre deudas no realizadas en condiciones de plena competencia, por ejemplo, cuando una subsidiaria canadiense paga intereses sobre dinero prestado de su empresa matriz estadounidense. Sin embargo, como los tratados tienen por objeto proporcionar beneficios fiscales solo a los residentes de los países del tratado, los residentes de terceros países, por ejemplo, la matriz de una empresa multinacional en un tercer país, podrían tratar de concertar transacciones de préstamo indirectamente a través de los Estados Unidos o quizás otros países calificar para beneficios del tratado que de otro modo no estarían disponibles con un préstamo directo del prestamista final o de algún otro miembro de la familia corporativa. A esto a menudo se le llama “compra de tratados”, estructurando préstamos para reducir la retención de impuestos a la tasa más baja posible del tratado fiscal. Estos acuerdos generalmente pueden y con frecuencia implican la interposición de un intermediario financiero no residente ubicado en una jurisdicción con un tratado fiscal entre un contribuyente canadiense y un residente de una jurisdicción sin un tratado fiscal para reducir la retención de impuestos que se aplicaría si se otorgara un préstamo y se pagaran los intereses. sobre el préstamo directamente. Como respuesta, las subsecciones 212(3.1) y 212(3.2) de la ITA establecen reglas objetivas específicas para abordar acuerdos de préstamos consecutivos a través de esquemas de compra de tratados, en sintonía con las características comerciales comunes de las transacciones de préstamos comerciales y los intereses de los inversores genuinos. participantes interesados en ellos.
|
| description_eng |
The Income Tax Act imposes withholding tax typically; article 11 of Canadian tax treaties allow Canada to tax interest arising in Canada and paid to residents of the other treaty country at a reduced rate of 10 or 15 percent from the statutory rate that could otherwise apply. Exclusively, under Canada-United States Treaty, no Canadian withholding tax applies to interest on non-arm’s length debt, for example, when a Canadian subsidiary pays interest on money borrowed from its U.S. parent corporation. Nevertheless, as treaties are intended to provide tax benefits only to residents of the treaty countries, residents of third countries, for example, the parent of a multinational enterprise in a third country, might seek to arrange lending transactions indirectly through the United States or perhaps other countries to qualify for treaty benefits that would not otherwise be available on a direct loan from the ultimate lender or some other member of the corporate family. This is often called “treaty shopping,” structuring loans to reduce the withholding tax to the least possible tax treaty rate. These arrangements generally may and frequently involve interposing a non-resident financial intermediary located in a tax treaty jurisdiction between a Canadian taxpayer and a resident of a nonta treaty jurisdiction to reduce the withholding tax that would apply if a loan were made and interest paid on the loan directly. As a response, subsections 212(3.1) and 212(3.2) of the ITA provide specific objective rules to address back-to-back loan arrangements through treaty shopping schemes, attuned to the common commercial characteristics of commercial lending transactions and the interests of genuine self-interested participants in them.
|
| author |
Díaz, Juan Carlos |
| author_facet |
Díaz, Juan Carlos |
| topicspa_str_mv |
préstamos consecutivos, normas contra la elusión de tratados, Canadá préstamos executados, normas contra a elusão de tratados, Canadá |
| topic |
préstamos consecutivos, normas contra la elusión de tratados, Canadá préstamos executados, normas contra a elusão de tratados, Canadá Canada Consecutive Loans, Norms Against Treaty Elusion, |
| topic_facet |
préstamos consecutivos, normas contra la elusión de tratados, Canadá préstamos executados, normas contra a elusão de tratados, Canadá Canada Consecutive Loans, Norms Against Treaty Elusion, |
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24 |
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Núm. 24 , Año 2024 : Enero-Junio |
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Centro de Estudios Fiscales |
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Revista de Derecho Fiscal |
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https://revistas.uexternado.edu.co/index.php/fiscal/article/view/9167 |
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Español |
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Article |
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http://purl.org/coar/access_right/c_abf2 info:eu-repo/semantics/openAccess Esta obra está bajo una licencia internacional Creative Commons Atribución-NoComercial-CompartirIgual 4.0. Juan Carlos Díaz - 2023 http://creativecommons.org/licenses/by-nc-sa/4.0 |
| references |
(Treaty shopping arrangements) Jinyan Li, Joanne Magee & J Scott Wilkie, Principles of Canadian Income Tax Law, 10th ed (Toronto, Thomson Reuters, 2022). Jinyan Li, Arthur Cockfield, & J. Scott Wilkie, International Taxation in Canada, 4th ed. (Toronto, LexisNexis Canada, 2018). Organisation for Economic Co-operation and Development, “Multilateral Convention To Implement Tax Treaty Related Measures To Prevent BEPS” Paris: OECE, November 24, 2016). Organisation for Economic Co-operation and Development, Preventing the Granting of Treaty Benefits in Inappropriate Circumstances, Action 6—2015 Final Report (Paris: OECD, October 5,2015). Canada v. MIL (Investments) SA [2007] FCA 236; aff’g. 2006 TCC 460. Alta Energy Luxembourg SARL v. The Queen, 2018 TCC 152; aff’d. 2021 SCC 49. Velcro Canada Inc. v. Canada, [2012] T.C.J. No. 49, [2012] 4 C.T.C. 2029, 2012D.T.C. 1100 (T.C.C.). Andrew Spiro and Shavone Bazarkewich, Specified Right: Back-to-Back Shareholder Loans, 2018 26:1 Canadian Tax Highlights 8-9. (Effect of intermediation) Lehigh Cement Ltd. v. Canada, [2010] F.C.J. No. 658, [2010] 5 C.T.C. 5081,2010 D.T.C. 5081 (F.C.A.). Prévost Car Inc. v. Canada [2009] FCA 57; aff’g. 2008 TCC 231. Velcro Canada Inc. v. Canada, [2012] T.C.J. No. 49, [2012] 4 C.T.C. 2029, 2012D.T.C. 1100 (T.C.C.). Canada v. MIL (Investments) SA [2007] FCA 236; aff’g. 2006 TCC 460 Canada Trustco Mortgage Co. v. Canada, [2005] 5 C.T.C. 215 (S.C.C.) 2005 D.T.C. 5523, at para 75. Amanda Heale, Simplifying the Taxation of Inbound Investment, 2020 Conference Report (Toronto: Canadian Tax Foundation, 2020) 12: 1-23. David G. Duff, Tax Treaty Abuse and the Principal Purpose Test—Part 1, International Tax Planning feature, 2018 66:3 Canadian Tax Journal 619-677. (Meaning of interest) England and Wales Court of Appeal in Pike v. Revenue and Customs Commissioners, [2014] EWCA Civ. 824 at para. 18(C.A.). Eric Hamelin, A Tax Court Dissent on Subsection 84(2) Current Cases feature, 2022 70:3 Canadian Tax Journal 666-84. Taylor Cao and Annika Wang, Introduction to Inbound Investments in Canada, in 2021 YP Focus Virtual Conference (Toronto: Canadian Tax Foundation, 2021), 2: 1-59. Nik Diksic and Sabrina Wong, Cross-Border Lending Practices, in Report of the Proceedings of the 69th Tax Conference, 2017 Conference Report (Toronto: Canadian Tax Foundation, 2018), 21:1-29. Steve Marshall and Craig Maurice, Advising on Inbound Investment, in 2022 Prairie Provinces Tax Conference, (Toronto: Canadian Tax Foundation, 2022), 9: 1-100. Jason Boland and Christopher Montes, A Detailed Review of the Back-to-Back Loan Rules, in Report of Proceedings of the Sixty-Eighth Tax Conference, 2016 Conference Report (Toronto: Canadian Tax Foundation, 2017), 26:1-32. Nik Diksic and Sabrina Wong, Cross-Border Lending Practices, in Report of the Proceedings of the 69th Tax Conference, 2017 Conference Report (Toronto: Canadian Tax Foundation, 2018), 21:1-29. Marlene Cepparo, Specified Right and Back-to-Back Shareholder Loans, 2018 26:2 Canadian Tax Highlights 8-9. Ian Bradley, Denny Kwan, and Dian Wang Are the Back-to-Back Withholding Tax Regime an Effective Anti-Treaty-Shopping Measure? International Tax Planning feature, 2016 64:4 Canadian Tax Journal 833-858. Inland Revenue Commissioners v. Duke of Westminster, (1935) [1936] A.C. 1 (H.L.). (Back-to-Back Loans) Income Tax Act, RSC 1985 (5th Supplement), [ITA 1985], ss 212(3.1) and (3.2). |
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