APA & MAP COUNTRY GUIDE 2017 CANADA

Transcription

1 APA & MAP COUNTRY GUIDE 2017 CANADA Managing uncertainty in the new tax environment

2 CANADA KEY FEATURES Competent authority APA provisions/ guidance Types of APAs available APA acceptance criteria Key deadlines APA term limits Filing fee Rollback availability Collateral issues Competent Authority Services Division, Canada Revenue Agency ( CRA ) CRA Information Circulars IC 94-4R, IC94-4RSR, and TPM-11 Unilateral, bilateral, and multilateral APAs are available. No specific guidance. Pre-filing meetings for the APA application must take place within 180 days after the end of the first taxation year that is to be covered by the APA. There are five year maximum terms, depending on the relevant facts and circumstances. A levy tailored to each case is applicable. This levy is charged on each accepted APA request or renewal and the amount will be included in an acceptance letter. Rollbacks may be negotiated where the facts and circumstances of open prior years are similar to those on which the APA was concluded. Requests to retroactively apply an APA are separate and distinct from an APA request. Any relevant tax issues, requests, or settlements should be raised at the pre-filing stage. 02 APA & MAP Country Guide 2017 Canada

3 PRE-FILING REQUIREMENTS Overview Anonymous pre-filing availability A pre-filing meeting is required before a formal APA request is submitted to the CRA. An APA request information package must be submitted at least two weeks before the pre-filing meeting and include: the global structure of the Taxpayer and industry in which it operates; the parties, participants, transactions, and transaction flows proposed to be covered; transfer pricing, audit and reassessment history, and related domestic or foreign tax audit issues and status; history of CRA issues, requests, and settlements; reasons for APA request; relevant transfer pricing policies, methodologies, practices, and accounting systems and policies; the TP method contemplated under the APA and underlying rationale; the impact of the proposed TP method on taxable income; relevant key interpretive or technical taxation issues; the reasons for requesting a bilateral APA or multilateral APA, countries involved, and the nature and extent of previous communications with foreign CA(s); and the key individuals involved throughout the APA process (including officials, employees, experts, and advisors) and written authorisation for each representative. Pre-filing is available on an anonymous basis. 03

4 APPLICATION REQUIREMENTS Content of APA application While the CRA considers each APA request as unique and may require additional documentation, the following items are generally to be included as part of an APA request: details of the Taxpayer, representatives, and non-resident entities, including contacts and business identification numbers; proposed term of APA and any rollback request; proposed transaction(s) to be covered; proposed TP method(s); proposed terms and conditions and critical assumptions; whether the request is for a bilateral, multilateral or unilateral APA; declaration statement; history, background, and business description of the Taxpayer; global structure, organisational arrangement, operational setup, major transaction flows of the Taxpayer; identification of all transaction flows that may have an impact on the pricing of covered transactions; functional currency for each entity and currency used for the proposed transactions to be covered; accounting and cost system, policies, procedures and practices, including any financial and tax accounting differences that may affect the TP methods; detailed functional analysis of the Taxpayer and relevant entities to the covered transactions; detailed industry and market analyses; transfer pricing background: legal considerations, methodologies, relevant APA rulings in foreign jurisdictions, any relevant Canadian or foreign income tax audits, appeals, judicial or CA history, Canadian or foreign unassessed taxation years; and proposed TP method and impact. The CRA will commit to accept an APA by sending an acceptance letter within 45 days after receiving an APA request. 04 APA & MAP Country Guide 2017 Canada

5 Language SME provisions The documentation should be submitted in English or French. No specific guidance. OTHER PROCEDURAL CONSIDERATIONS General Monitoring & compliance Renewal procedure COUNTRY EXPERIENCE Statistics MAP PROCEDURE MAP provisions The CRA follows a standard pre-filing, application and monitoring process. There are no unique procedural aspects. The Taxpayer must provide an APA report demonstrating APA compliance within the time period negotiated with the CRA and specified in the APA. Renewals must be lodged no later than nine months before expiry. There were 132 active APA applications during income year and 31 completed applications. The average completion time for bilateral and multilateral APAs was 48 months. The CRA has had an APA program since There are no specific provisions for the MAP procedure in domestic law. 05

6 DOUBLE TAXATION TREATY NETWORK The following treaties include MAP provisions which are the basis for bilateral and multilateral APA negotiations: Algeria Argentina Armenia Australia Austria Azerbaijan Bangladesh Barbados Belgium Brazil Bulgaria Cameroon Chile (I) China Colombia Croatia Cyprus Czech Republic Denmark Dominican Republic Ecuador (I) Egypt Estonia Finland France (I) Gabon Germany Greece (I) Guyana (I), (IV) Hong Kong Hungary Iceland (I) India Indonesia Ireland (I) Israel (IV) Italy Ivory Coast Jamaica Japan Jordan Kazakhstan (I) Kenya Korea (Republic of) Kuwait Kyrgyzstan Latvia Lithuania Luxembourg Malaysia Malta Mexico (I) 06 APA & MAP Country Guide 2017 Canada

7 DOUBLE TAXATION TREATY NETWORK (cont d) Moldova (I) Mongolia (I) Morocco Netherlands New Zealand (IV) Nigeria Norway Oman Pakistan Papua New Guinea Peru (I) Philippines Poland (IV) Portugal Romania Russia Senegal Serbia (IV) Singapore Slovak Republic Slovenia South Africa (I) Spain Sri Lanka Sweden Switzerland (I) Taipei (III) Tanzania Thailand Trinidad and Tobago Tunisia Turkey Ukraine United Arab Emirates United Kingdom (I) United States (I) Uzbekistan Venezuela (I) Vietnam (IV) Zambia Zimbabwe NOTES I II denotes treaties with MAP arbitration provisions. denotes treaties with the USSR that remain applicable until a separate tax treaty is concluded. III denotes treaties between the countries representative office in Taipei and the Taipei Economic and Cultural Office in the relevant country. IV denotes treaties that became effective within the last five years. V denotes treaties that are awaiting ratification. VI denotes MAP provisions identical to para 3, art 25 of the OECD Model Convention with respect to Taxes on Income and on Capital. VII arbitration is to be conducted under the statutes of the ECJ. VIII arbitration is to be conducted under the statutes of the ICJ. 07

8 DLA PIPER CONTACTS Joel Cooper Co-Head International Transfer Pricing T M joel.cooper@dlapiper.com Randall Fox Co-Head International Transfer Pricing T M randall.fox@dlapiper.com CANADA Max Weder Counsel T max.weder@dlapiper.com 08 APA & MAP Country Guide 2017 Canada

9 DLA Piper is a global law firm operating through various separate and distinct legal entities Further details of these entities can be found at This publication is intended as a general overview and discussion of the subjects dealt with, and does not create a lawyer-client relationship. It is not intended to be, and should not be used as, a substitute for taking legal advice in any specific situation. DLA Piper will accept no responsibility for any actions taken or not taken on the basis of this publication. This may qualify as Lawyer Advertising requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome. Copyright 2017 DLA Piper. All rights reserved. JUL