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.
19(1) David R. Senécal
(613) 957-2074
HBW 4125-U2
HBW 6591-U2
March 1, 1990
19(1)
Pursuant to paragraph 3 of Article 19 of the Canada-U.S.S.R. Income Tax Agreement signed by our two countries on June 13, 1985, we would like to clarify the application of the said Agreement as it relates to the taxation of joint ventures in the Soviet Union.
We understand that, in addition to income tax at 30 percent, the income of the foreign joint venture participation is subject to a tax of 20 percent if the hard currency income is distributed abroad unless the repatriation of profits is to a country with which the Soviet Union has an income tax treaty which either specifically deals with the taxation of joint ventures or which has an article covering the taxation of dividends. Where such a treaty exists, the rate specified in the treaty is applicable.
In our capacity as the competent authority for Canada, we seek to clarify that, for the purposes of any withholding tax imposed by the Soviet Union on the part of the profits from a joint venture that are transferred abroad to or for the benefit of a Canadian resident, such profits shall be treated as dividends and will therefore be subject to a maximum 15% withholding tax under paragraph 2 of Article 8 of the Agreement.
If you are prepared to accept the foregoing proposal, this letter and your letter confirming our position will be regarded as constituting an official agreement between competent authorities on this matter.
Yours sincerely
C. Savage
A/Director
Provincial and International
Relations Division
- c. c.: Jacques Sasseville Chief, Tax Treaties Department of Finance
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