Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: 1. Whether the rate of Branch tax is reduced under the Canada-Ireland Treaty. 2. Whether Canada's corporate income tax rate is the same for a Canadian resident corporation as for a non-resident corporation.
Position: 1. Yes 2. Yes
Reasons: Article 10(6) of the Canada-Ireland Treaty restricts the rate of Part XIV tax that can be imposed and both resident and non-resident corporations carrying on business in Canada are subject to the same general corporate rates of Part 1 tax.
September 13, 2012
XXXXXXXXXX
Dear XXXXXXXXXX:
The office of the Honourable James M. Flaherty, Minister of Finance, forwarded me a copy of your correspondence concerning whether the rate of Branch tax imposed in Canada is reduced under the Canada-Ireland Income Tax treaty, and whether Canada’s corporate income tax rates are the same for a Canadian resident corporation as for a non-resident corporation.
Where Article 10(6) of the treaty applies, the maximum rate of Branch tax that can be imposed under section 219 of the Income Tax Act is 5%. A non-resident corporation may also be eligible under the same Article for an exemption on the first $500,000 of cumulative earnings attributable to its Canadian permanent establishment. This exemption must be shared between the corporation and all of its associated corporations.
Both Canadian resident and non-resident corporations carrying on business in Canada are subject to the same general corporate rates of Part I tax under the Act. You may find the Government of Canada’s Part 1 tax rates and all corresponding provincial rates on the Canada Revenue Agency website at http://www.cra-arc.gc.ca/tx/bsnss/tpcs/crprtns/rts-eng.html.
I trust that the information I have provided is helpful.
Yours sincerely,
Gail Shea, P.C.,M.P.
Minister of National Revenue
2012-0458841M4
Hooey, Kathy
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