The purpose of this bill is to give legal effect in Canada to an agreement which, as a result of negotiations and subsequent exchanges, has been reached between the government of Canada and the government of the Netherlands for the avoidance of double taxation and the establishment of rules for reciprocal fiscal assistance in the matter of income taxes, which agreement was signed at Ottawa on April 2, 1957. The agreement follows the pattern established in the present income tax agreements which Canada has made with the United States, United Kingdom, Sweden, New Zealand, Ireland, Denmark, France and the Federal Republic of Germany, and has as its purpose the avoidance of double taxation and the exchange of information.
Double taxation is avoided chiefly by a reciprocal system of tax credits in which the country of residence gives credit for the tax imposed by the country on the income at its source. The agreement contains the usual provisions limiting the taxation of trading profits through the permanent establishment rule. In addition certain special provisions are made; profits from the operation of ships and aircraft will be taxed solely in the country of the residence of the operator.
Then, Mr. Chairman, the schedule which is attached to the bill has certain articles, and I suggest that probably after we have taken up clause 1 we can go to clause 2, then deal with the different articles in the schedule and then come back to clause 3.
Topic: INTERIM SUPPLY
Subtopic: INCOME TAX