On November 11, 2012, the Government of Canada signed a double
tax treaty with the Government of the Hong Kong Special
Administrative Region of the People's Republic of China. This
long-awaited treaty represents a welcome development that should
facilitate trade and investment, particularly from Hong Kong into
Canada. The treaty may present new opportunities for structuring
some investments by Chinese enterprises into Canada.
The key provisions of the new treaty may be summarized as
Dividend withholding tax rate of 5% (for dividends paid to a
company that controls directly or indirectly at least 10% of the
voting power in the company paying the dividends) or 15% in all
Interest withholding tax rate of 10% (applies only to related
party interest; arm's-length interest is generally exempt under
Canadian domestic law).
Royalty withholding tax rate of 10%; unlike many other
treaties, there is no exemption for patent or
Standard capital gains article that permits source state to tax
gains derived by a resident of the other state from a sale of
shares deriving more than 50% of their value directly or indirectly
from immoveable property situated in the source state; not as
favourable as some European treaties, which exempt real property
"used in a business". These European treaties, such as
the Netherlands treaty, may be preferable for certain investments
in Canadian mining companies.
There is a specific anti-avoidance rule under which
treaty-reduced rates for dividends, interest or royalties may be
denied in circumstances where a structure has, as one of its main
purposes, the obtaining of treaty benefits. This targeted
"anti-treaty shopping" provision parallels similar
provisions in recently signed treaties with New Zealand, Poland and
Colombia. However, this type of rule is not found in most other
treaties. Careful consideration of the impact, if any, of this rule
will be required in any case where these treaty benefits are
sought. In the case of a Chinese investment into Canada made
through an intermediate Hong Kong resident company, the potential
effects of this rule will require particularly close
The treaty includes an "Exchange of Information"
article. Notably, in a protocol signed at the same time as the
treaty, the contracting states agreed that this provision does not
require the parties to exchange information on an automatic or a
spontaneous basis, and that information exchanged between the
states must not be disclosed to any third jurisdiction for any
The treaty will enter into force following its ratification by
both contracting states.
For withholding taxes, the treaty will apply to amounts paid or
credited to non-residents on or after January 1 in the calendar
year following ratification, and in respect of other Canadian taxes
for taxation years beginning on or after January 1 in the calendar
year following that in which the treaty is ratified.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Emotional culture is influenced in great part by the mindset and actions of leadership, although employees also play more of a role than they may realize in creating the culture that exists in the group.
The session will be led by Dr. Robert Brooks, an award-winning author and psychologist. In his presentation, Dr. Brooks will describe the mindset and realistic practices of leaders and staff that help to nurture and sustain a culture characterized by positive emotions, satisfying, respectful relationships, a sense of meaning and ownership for one’s work, and enhanced job performance. Examples will be offered to illustrate strategies for developing a positive emotional culture in an organization.
Join leading lawyers from the Blakes Pensions, Benefits & Executive Compensation group as they discuss recent updates and legal developments in pension and employee benefits law as well as strategies to identify and minimize common risks.
Ready? The company wants its in-house lawyers to be on the front lines, but there is little to no training around how to “look for risk,” let alone how to evaluate it or report it. Our special guest, Sterling Miller, will present simple ideas and processes you can use to spot and identify risk, and demonstrate how to evaluate and manage that risk alongside the business.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).