Canada-US: arbitration under treaty arrives
December 21, 2010 in Transfer Pricing International Journal
By Mark Kirkey, Dale Hill and Jim Wilson, Gowlings, Ottowa
Multinational companies are facing increased scrutiny of their international transactions, particularly those with related parties, by governments around the world. In the landscape of globalisation and growing government deficits there are many instances where tax adjustments are raised and assistance is needed to relieve double taxation. A provision included in the 5th Protocol to the Canada-US Tax Treaty deals with arbitration of such disputes and may be eligible for arbitration beginning on December 15, 2010.
Arbitration under the Canada-US treaty is a new option available to taxpayers who have been assessed by either the US or Canadian tax authorities on certain income including transfer pricing adjustments and where such assessment results in double tax that the two countries cannot resolve within a 24 month period. Previously, negotiations in competent authority could go on endlessly, sometimes for five or more years. Now, after a taxpayer submits all the relevant documents that the…
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