Canada Signs The MLI: The Path Forward For Foreign Holding Companies

Canada, along with 67 other jurisdictions, were the original signatories to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the "MLI"). The MLI is part of the Organisation for Economic Co-operation and Development (the "OECD") initiative to combat base erosion and profit shifting ("BEPS"), which generally refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to shift profits to low or no-tax jurisdictions. The MLI is an instrument that sits on top of many of Canada's existing bilateral treaties and implements parts of BEPS that otherwise would have required bilateral treaty negotiations and amendments. The MLI will modify up to 75 of Canada's bilateral tax treaties (the "Covered Tax Treaties"). Since much has been written about the MLI, the purpose of this bulletin is to provide a brief overview of the MLI as it applies to the Covered Tax Treaties, highlight