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Non-Resident Withholding Tax Rates for Treaty Countries
Notes
(1) The actual treaty should be consulted to determine if specific conditions, exemptions or
tax-sparing provisions apply for each type of payment. The rates indicated in the table apply
to payments from Canada to the treaty country; in some cases, a treaty may provide for a
different rate of withholding tax on payments from the other country to Canada.
(2) As of May 3, 2013, Canada is negotiating or renegotiating tax treaties or protocols with the
following countries:
Australia
Madagascar (new) Spain
China (PRC)
Malaysia United Kingdom
Israel
Netherlands
(3) Canada eliminated its domestic withholding tax on certain arm’s-length interest payments,
however non-arm’s length payments continue to be subject to a 25% withholding tax.
(4) Dividends subject to Canadian withholding tax include taxable dividends (other than capital
gains dividends paid by certain entities) and capital dividends.
The withholding tax rate on dividends under the terms of Canada’s tax treaties generally
varies depending on the percentage ownership of the total issued capital or percentage
ownership of the voting rights owned by the recipient.
(5) Royalties generally are defined to include:
• Payments received as consideration for the use of or the right to use any copyright,
patent, trademark, design or model, plan, secret formula or process.
• Payments received as consideration for the use of or the right to use industrial,
commercial or scientific equipment or for information concerning industrial, commercial
or scientific experience.
• Payments in respect of motion picture films, works on film or videotape for use in
connection with television.
• In some cases, technical assistance in respect of these items is also included.
Paragraph 212(1)(d) generally exempts from withholding tax cultural royalties or similar
payments for copyrights in respect of the production or reproduction of any literary,
dramatic, musical or artistic work, other than a motion-picture film or a videotape or other
means for use in connection with television. However, several treaties exempt all cultural
royalties from tax.
Canada has announced in its treaty negotiations that it is prepared to eliminate the
withholding tax on arm’s-length payments in respect of rights to use patented information
or information concerning scientific experience. It also stated that it is prepared to
negotiate, on a bilateral basis, exemptions from withholding taxes for payments for the use
of computer software. As such, some recent treaties generally contain an exemption for
such payments.
Current as of May 3, 2013
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