BVI & Canada: Down To business – TIEA Now Effective

The Canada-BVI Tax Information Exchange Agreement ("TIEA") came into force on 11 March 2014. The TIEA was signed in May 2013, and the effective date provisions are set out in Article 13 of the Agreement. The BVI is now party to 25 TIEAs.

What are the benefits?

The BVI/Canada TIEA is significant due to changes introduced to Canadian tax laws under the 2007 Canadian Budget, which provides beneficial tax treatment for business income repatriated from TIEA jurisdictions, such as the BVI. It is understood that under Canadian law, active business income of a company resident¹ in a TIEA jurisdiction is eligible for tax-free dividend repatriation to a Canadian parent as "exempt surplus", thus allowing the Canadian parent to benefit from the BVI's zero rate corporate tax regime. Additionally, passive business income, such as interest received from another foreign affiliate resident and carrying on an active business in a third jurisdiction (also being a TIEA or