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.
We are writing in regard to your letter dated January 17, 1989 (copy attached), in which you requested confirmation on the tax status of the XXX regarding, interest earned on deposits held in Canada. Our Vancouver District Office replied to the letter on April 4, 1989 (copy attached) and acknowledged tax exemption to the XXX in accordance with paragraph 3, Article 11 of the Canada-China Income Tax Convention.
Our Vancouver District Office was of the understanding that the XXX was a financial establishment mutually agreed upon by the competent authorities of both states in accordance with subparagraph 3(b)(iv) of Article 11. Our division has no record of such a competent authority agreement.
Article 3 of the Convention delegates the competent authority function to your Ministry of Finance or its authorized representative. Could you please provide us with names and addresses of the competent authority delegates. 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).
We are of the opinion that subparagraph 3(b)(i), (ii) and (iii) of Article II do not exempt XXX from withholding tax on interest earned from deposits held in Canada. Accordingly, exemption can only be provided by mutual agreement between the competent authorities. We are prepared to accept XXX and eligible for exemption on interest arising in Canada in accordance with subparagraph 3(b)(iv) of Article 11. If your competent authority is prepared to accept the foregoing proposal, this letter and their reply will be regarded as constituting an official agreement on this matter. The agreement will be effective for all interest payments made after 1988.
We look forward to hearing from you soon.
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