Canadian Distributors and Selling Agents
A foreign business which is resident in a country with which Canada has a tax treaty can have an independent sales representative organization in Canada by way of distribution arrangements, or can enter into sales contracts to supply goods or services to Canadians, without being liable to Canadian income tax on its profits from such sales. Care must be taken to ensure that the foreign entity does not maintain a permanent establishment in Canada. In addition, its Canadian broker or agent must be independent of the foreign business organization, and not devote all or almost all of its efforts to representing the foreign business. A foreign business will be liable for Canadian income tax if it has a dependent agent or broker in Canada, with authority to negotiate and conclude contracts in its name.
In addition, certain bilateral tax treaties provide that a foreign business can store its products in Canada for purposes of display or delivery, or to maintain an office in Canada solely for the purpose of purchasing Canadian goods, or for collecting information without becoming liable for Canadian income tax.
Additional posts from the blog
May
10
New Bill Heightens Potential for More Investment Canada Reviews of SOE Acquisitions
Last week the Canadian Government introduced amendments to the Investment Canada Act (ICA) to implement its revised policy towards state-owned enterprises (SOEs) which it announced in December last year. At that time, while it approved the acquisition by Chinese SOE, CNOOC, of Canadian oil and gas company, Nexen, the Government announced its intention to prohibit acquisitions of control of Canadian oil sands businesses by SOEs except on an exceptional basis.
Apr
26
Presentation: Estate Planning for the Business Owner
In this presentation, Dentons' Doris Bonora and Cheryl Gibson describe the important considerations for business owners regarding estate planning.
Apr
17
No Class Action This Time: Federal Court of Appeal Upholds Arbitration Agreement
The complicated interplay between holding parties to an arbitration agreement and upholding the purpose and intent of legislation concerned with public order is not new in Canada. In 2011 the Supreme Court of Canada decided Seidel v Telus Communications Inc, in which the court refused to enforce an arbitration agreement at the expense of a class action proceeding. Seidel concerned the British Columbia Business Practices and Consumer Protection Act.
