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An Early Christmas Gift for Multinational Companies


Multinational companies are facing increased scrutiny of their international transactions, particularly those with related parties, by governments around the world. In the landscape of globalisation and the growing government deficits there are many instances where tax adjustments are raised and assistance is needed to relieve double taxation. Taxand Canada assesses the provision included in the 5th Protocol to the Canada-US Tax Treaty that deals with arbitration of such disputes which may be eligible for arbitration beginning 15 December 2010.

Taxand's Take

Arbitration under the Canada-US treaty is a new option available to taxpayers who have been assessed by either the US or Canadian tax authorities on certain income including transfer pricing adjustments and where such assessment results in double tax that the two countries cannot resolve within a 24 month period.

The arbitration provisions in the Canada-US Treaty will motivate competent authority analysts to reach a principled decision and will hopefully reduce the number of extreme positions put forward by each country. Neither country will want the decision making process handed off to arbitrators, except in the rarest of cases, and as such will force the analysts of each country to work diligently towards a conclusion.

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Your Taxand contact for further queries is:
Mark Kirkey
T. +1 61 3786 8688

Taxand's Take Author