Last year, Canada's controversial 2007 spring
budget1 effectively posted a notice to the tax
havens of the world: Tell us, through tax information exchange
agreements, about the undisclosed income dishonest Canadians
are hiding in your banks and trust companies and you will be
rewarded with investment by honest Canadians, motivated by tax
incentives we will give them; but refuse and we will impose
punitive tax on honest Canadians who venture near your shores.
(For prior coverage, see Doc 2007-6959 or 2007 WTD
55-1.)
The second legislative leg of that carrot and stick
approach2 to inducing TIEAs was announced July 14
with draft amendments to the foreign affiliate regulations that
would provide tax exemptions (the carrot) to Canadians who
carry on business in TIEA countries.3
