26 February 1990 Income Tax Severed Letter ACC8843 - Canada-USSR Income Tax Convention on Interest Payments

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.

EACC8843

19(1) Jim Wilson
(613) 957-2063

HBW 4125-U2
HBW 6591-U2

February 26, 1990

Dear 19(1)

Re: 24(1)

I am writing in reply to your letter dated November 21, 1989, concerning the tax status in Canada of the above-noted institution.

Pursuant to article 9, paragraph 3 of the canada - U.S.S.R. Income Tax Convention, interest arising in one of the Contracting States and paid to a resident of the other Contracting State is taxable only in that other State where paid to parties described in subparagraphs (a), (b) or(c). Our comments to these subparagraphs are as follows:

3(a) Interest paid "to the Government of that other state". It is our understanding that 100% government-owned institutuions (i.e. instrumentalities of the Government) are not intended to fall within the domain of this provision. If this were not the case, there would be no need for a special provision concerning the "central bank" as seen in subparagraph 3(b).

3(b) Interest paid "to the central bank of that other State". It is our understanding that Gosbank U.S.S.R. is the central bank.

3(c) Interest paid "in respect of a loan made, guaranteed or insured by the Government of that other State or by such public body of that other State as is specified and agreed between the competent authorities of the "Contracting States". Our comments in 3(a) above apply equally to the term "Government" as used here. In regard to the term "public body", our division has no record of a competent authority agreement pertaining to this provision. The Minister of National Revenue has delegated the exercise of the competent authority function for the determination of such issues to myself (i.e. Director of Provincial and International Relations Division).

24(1)
The EDC is a Crown corporation, wholly-owned by the Government of
Canada, whose purpose is to facilitate and develop Canada's
export trade. The EDC pursues that purpose by providing
insurance, guarantees and export financing. I am enclosing an
Information Circular issued by the EDC which provides additional
information concerning the operation of that company. If you
have any specific questions relevant to the operation of the EDC,
I would be prepared to obtain the information for you.

If you are prepared to accept the foregoing proposal, this letter and your letter confirming the two preceding paragraphs will be regarded as constituting an official agreement between competent authorities on this matter. this agreement will be effective for all interest payments made after 1988.

I hope this is satisfactory to make your determination on the above.

Yours sincerely,

• c. Savage A/Director Provincial and International Relations Division

Enclosure

Document Disclosed Pursuant to the Access to Information Act Document Divulgué en vertu de la loi sur l'accès à l'information