Canada said it has ratified a protocol to the tax treaty currently in place with the United Kingdom, which includes Northern Ireland.
For purposes of non-resident withholding tax, this protocol will be effective for amounts paid or credited on or after January 1, 2005.
The protocol contains some new anti-avoidance provisions in the Dividend and Interest Articles, which state that the Articles of the Treaty shall not apply where the main purpose or one of the main purposes of creating or assigning the debt or shares was to take advantage of these treaty articles.
The general withholding tax rate on dividends from Canadian equities for residents from the UK and Northern Ireland investing in Canada will continue to be 15%. A reduced withholding tax of 5% will apply for dividends between affiliated companies. Interest will continue to be subject to 10% withholding tax.
The protocol amends the tax treaty between these two countries that was signed on September 8, 1978 and subsequently amended by protocols signed on April 15, 1980 and October 16, 1985.