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MLI to Modify Canadian Tax Treaties in 2020

MLI to Modify Canadian Tax Treaties in 2020

Many individuals and multinationals will be affected by new changes to many of Canada’s international tax treaties.


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To implement these treaty changes, Canada has ratified the multilateral instrument (MLI) and deposited its ratification instrument with the OECD on August 29, 2019. As a result, the MLI will enter into force in Canada on December 1, 2019, and will affect a significant portion of Canada's treaties beginning in 2020.

Depending on when Canada's treaty partners approve the MLI and deposit ratification instruments with the OECD, the MLI may need to be read alongside some of Canada's tax treaties as early as January 1, 2020. Although a treaty partner of Canada must also adopt the same MLI provision before it applies to a particular tax treaty, affected taxpayers will need to keep a close eye on the final list of provisions of the MLI Canada and its treaty partners deposit with the OECD, to ensure all of the relevant provisions are considered as taxpayers continue to prepare for changes to Canada's treaty network.

Note that, unlike Canada, the United States has not signed onto the MLI and, as such, the MLI will not affect the Canada-U.S. Treaty.

Download this edition of the TaxNewsFlash to learn more.

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