Canada supports the OECD BEPS Action 5 recommendations and has committed to the spontaneous exchange of information on tax rulings with other countries. In Information Circular (IC) 70-6R7, which replaces IC 70-6R6 (dated August 29, 2014), the Canada Revenue Agency (CRA) outlines the types of rulings that may be shared with these countries. IC70-6R7 applies to technical interpretations, rulings or pre-ruling consultations requested after its date of publication (April 22, 2016).
Canada has agreed to exchange information with countries on the following types of rulings:
- Cross-border rulings on preferential regimes (includes international shipping and foreign life insurance operations of a Canadian company).
- Cross-border rulings on transfer pricing legislation.
- Cross-border rulings providing a downward adjustment not directly reflected in the taxpayers’ accounts.
- Permanent establishment rulings.
- Related-party conduit rulings.
If a ruling falls into one of the above categories, a summary of the ruling may be exchanged with the countries of residence of the immediate parent company, the ultimate parent company and other parties. These countries may request detailed portions of the ruling. Exchanges of information will be executed by the CRA’s Competent Authority Services Division. Taxpayers making a ruling request must include sufficient information to allow the CRA to identify the relevant parties for the exchange.
According to p.49 of the 2016 Canadian Budget (March 22, 2016), the CRA exchanges information under Canada’s tax treaties, tax information exchange agreements and the multilateral Convention on Mutual Administrative Assistance in Tax Matters. These agreements include provisions restricting the use of the exchanged information for the enforcement of tax laws. Any information exchanged with respect to the tax rulings will be subject to the confidentiality provisions in the relevant agreement.
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