Chungsen Leung

[Petitions, November 6th, 2013]

Mr. Speaker, I wish to present a petition from constituents of my riding. It is to regulate Canadian mining companies operating abroad.

[Leader of the Liberal Party of Canada, October 30th, 2013]

Mr. Speaker, families in my riding of Willowdale want safer streets for their children. That is why they are shocked by the Liberal leader's priority to legalize marijuana.

He claims that making pot legal would make it more difficult for children to access drugs, pointing to the regulation of alcohol as an example. Parents in my community see through the Liberal leader's rhetoric.

We know that, according to the Canadian Centre for Substance Abuse, teens are twice as likely to have consumed alcohol in the last year than pot. Regulated rules for alcohol do not prevent teens from getting access to it, just like the Liberal's plan to legalize marijuana will not make it tougher for our kids to access drugs. In fact, it will do just the opposite.

By sending the message that recreational drug use is acceptable, the leader of the Liberal Party is once again showing us that he lacks the judgment to lead. Clearly he is in over his head.

[Portugal Week, June 13th, 2013]

Mr. Speaker, this week Canadians of Portuguese heritage all across the country are celebrating Portugal Week. From coast to coast to coast, there will be festivals, parades, folk dances, sporting events and many community gatherings.

This is a week to celebrate and recognize Portuguese cultural and historical heritage, which has been a part of Canada since the discovery of Labrador by Portuguese explorers more than 500 years ago. Making this year's festival even more special is the fact that this is the 60th year of large-scale Portuguese immigration to Canada.

The Portuguese community is well established and well integrated across the country, particularly in my hometown of Toronto, and in Montreal.

On behalf of our Conservative caucus, I want to thank all Canadians of Portuguese heritage for their contribution to our country. I wish them all a happy Portugal Week.

[Member spoke in Portuguese]

[Tax Conventions Implementation Act, 2013, June 10th, 2013]

Mr. Speaker, again I totally disagree with the member's line of thinking.

First, there is no crime in having money overseas. Any international businessperson will say that we need to have international accounts, and that is precisely why we are negotiating with countries such as Switzerland and Luxembourg, which have in the past been tax havens in not disclosing the holders of their bank accounts. This information is now exchanged among the various taxing authorities around the world, and there is a way of tracking the source of that income.

Also, as I remember from my public accounting days, the Canadian tax system is probably one of the fairest systems in the way that it is administered, and we certainly have the co-operation of the five countries that concur with us on this aspect.

[Tax Conventions Implementation Act, 2013, June 10th, 2013]

Mr. Speaker, prior to entering politics, I spent 40 years doing business with 35 or 36 countries around the world. Before entering a country to do business, it is absolutely vital to have a clear understanding of the road map of the local business culture, the legislative framework, import-export regulations, permits and taxation. It is also important that in our international global economy, we need to understand both sides of the trading countries. Therefore, it is absolutely important that these regulations are set forth as we negotiate our business relations with foreign corporations.

[Tax Conventions Implementation Act, 2013, June 10th, 2013]

Mr. Speaker, I disagree with the premise of the member, that in order to solve this problem, we simply need to dedicate more resources. As business partners, it is far more intelligent to share information with the countries we are dealing with by dedicating resources to electronic detection and getting the co-operation of the other countries to assist us with tax information. It is a far more efficient way of identifying where the sources of income are and taxing them accordingly.

[Tax Conventions Implementation Act, 2013, June 10th, 2013]

Mr. Speaker, the member opposite is quite right in what she mentioned. When we negotiate tax treaties for our country, it is like two business partners. We have to arrive at an understanding of how we are prepared to do it. There may be a lot of conditions that lead up to the reason why we would negotiate a tax treaty. One of them, in the case of Namibia, had to do with Canadian companies mining there for diamonds and uranium oxide. In another case, there are Canadian aid workers in those areas to help better the country after natural disasters or human conflicts.

[Tax Conventions Implementation Act, 2013, June 10th, 2013]

Mr. Speaker, I am thankful for this opportunity to speak at second reading of Bill S-17.

As members know, this bill would implement Canada's recently concluded tax treaties with Namibia, Serbia, Poland, Hong Kong, Luxembourg and Switzerland. These new and updated fees would augment Canada's strong network of tax treaties.

Indeed, currently Canada has comprehensive tax treaties in place with 90 countries, one of the world's largest network of bilateral tax treaties. This is an important feature to Canada's international tax system, a feature that is key to our ability to compete.

As part of Canada's ongoing effort to update and modernize our network of income tax treaties, Bill S-17 would achieve two important objectives.

First, it would help combat tax evasion by ensuring Canada works with other countries to stop tax cheats. Clearly, I would hope that all parliamentarians and Canadians would agree that everyone should pay their fair share of taxes.

Second, it would help encourage global trade by preventing double taxation.

In my time today, I would like to focus specifically and in greater detail on what the tax treaties with Namibia, Serbia, Poland, Hong Kong mean.

First I will speak about Namibia.

Canada's proud and active engagement with Namibia dates from 1977 to 1982 negotiations on the United Nation settlement plan. Canada actively supported Namibia's independence in 1989-90 and provided military peacekeepers, police monitors, election supervisors and technical experts.

On the global stage, there are a number of areas in which Canada and Namibia actively co-operate. These include the Kimberley process, to control the trade in conflict diamonds, initiatives to control high seas overfishing and the commercial seal harvest.

Bilateral merchandise trade between Canada and Namibia was $238.2 million in 2011, with Canadian imports from Namibia accounting for $230.3 million of that, largely uranium oxides and Canadian exports to Namibia include cereals and machinery.

There are significant opportunities for investment in Namibia. Currently, the major focus for Canadian investors is mining, particularly diamonds and uranium. Cumulatively, Canada's foreign direct investment in Namibia reached $20 million at the end of 2010, most of which was in the mining sector.

The impetus for the convention with Namibia, signed on March 25, 2010, the official term for tax treaty, was to contribute to the elimination of tax barriers to trade and investment between Canada and Namibia and to help solidify the existing economic and financial dealings between the two countries.

It is consistent with the government's commitment, as announced in the 2008 Speech from the Throne, to seek out new investment and trade opportunities for Canadians and to promote greater global prosperity.

The convention generally follows the pattern of other tax treaties already concluded by Canada. Accordingly, it generally follows the format and language of the Model Tax Convention on Income and on Capital of the Organisation for Economic Co-operation and Development, OECD.

Most countries, including Canada and Namibia, tax their residents on their worldwide income. Moreover, where a resident of a particular country, known as the “country of residence”, derives income from sources in another country, for example, from a business located there, it is not uncommon for that other country, known as the “country of source”, to subject that income to tax.

The convention recognizes this international taxation dynamic and sets out under what circumstances and to what extent Canada and Namibia may tax the earnings of one another's residents.

The convention also provides that where income, profit or gains may be taxed in both countries, the country of residence, if it taxes, is to allow relief from double taxation against its own tax for the tax imposed by the country of source.

In the case of Canada, effect is given to the relief obligations arising under the convention by application of the general foreign tax credit system provisions of Canada's domestic law or relevant exemption provisions of the law where applicable.

Again, let me recap and expand the highlights of the convention.

The convention sets a maximum withholding tax rate of 5% for dividends paid to a company that holds directly at least 25% of the share capital of, or controls directly or indirectly at least 25% of the voting power in the company that pays the dividend and a maximum rate of 15% in all other cases.

The convention also limits to 10% the maximum withholding rate on interest and royalties, except that no tax may be withheld on interest paid to the government or a pension fund or in respect of debt finance by Export Development Canada or a debt of a government.

It also includes a provision that limits the potential for double taxation arising from the application of Canada's taxpayer migration rule without restricting Canada's ability to tax its departing residents on their pre-departure gains. It also includes the latest standard of the OECD on exchanges of tax information in order to assist Canadian tax authorities in the administration of the Canadian tax law.

Let me talk about Serbia. Relations between Canada and Serbia, formerly with Montenegro, part of the Federal Republic of Yugoslavia, and the state union of Serbia and Montenegro, redeveloped quickly following the overthrow of Slobodan Milosevic's regime in October 2000. In 2006, Canada welcomed Serbia's admission into NATO's partnership for peace program and to La Francophonie as an observer.

Canada is encouraged by the democratic and economic transformation of Serbia and its commitment to achieving greater integration and co-operation with the European Union and its institutions. The international community, including Canada, is helping Serbia make a successful transition to a free market democracy, develop strong regional co-operation with its neighbours and maintain its own citizens' security. Canada and Serbia enjoy strong people-to-people relationships and benefit from cultural and academic exchanges. In 2006, Canada and Serbia signed a readmission agreement and later that year an air transport agreement, which allowed for the resumption of direct flights between the two countries in June 2007.

In 2010, the two countries signed a memorandum of understanding on the prosecution of war crimes, crimes against humanity and genocide.

Canada-Serbia trade has increased almost tenfold over the past five years. In 2009, bilateral trade in goods totalled just under $60 million. In addition, Canada's investment commitments in the region, including Montenegro, reached more than US$500 million in 2007 and have been increasing steadily. Important Canadian investments have recently been made or committed in the areas of real estate and construction, tourism, agriculture, informatics, and energy and mining, among others. Opportunities for further Canadian investment include road, rail and urban transportation infrastructure upgrading and construction.

As such, the impetus for the convention with Serbia signed on April 27, 2012, which is the official term for the tax treaty, was to contribute to the elimination of tax barriers to trade and investment between Canada and Serbia and to help solidify the economic links between the two countries. It is also consistent with the Canadian government's commitment, as outlined in the 2008 Speech from the Throne, to seek out new investment and trade opportunities for Canadians and to promote global prosperity.

Like Namibia, the convention generally follows the pattern of other tax treaties already concluded by Canada. Accordingly, it generally follows the format and language of the model tax convention on income and on capital of the Organisation for Economic Co-operation and Development.

Also like Namibia, most countries, including Canada and Serbia, tax their residents on their worldwide income. Moreover, as I described earlier, where a resident of a particular country derives income from sources in another country it is not uncommon for that other country to subject that income to tax. The convention recognizes this international taxation dynamic and sets out under what circumstances and to what extent Canada and Serbia may tax the earnings of one another's residents.

Let me recap the highlights from the convention: it sets the maximum withholding tax rate of 5% on dividends paid to a company that controls directly at least 25% of the voting power of the company that pays the dividends and a maximum withholding tax rate of 15% will apply to dividends paid in all other cases.

The convention also limits to 10% the maximum withholding tax rate on interest and royalties, except that no tax may be withheld on interest paid to the government or the central bank. The convention also limits to 15% the maximum withholding tax rate on payments of pension income.

Clearly, members will notice that the provisions for both Namibia and Serbia were very similar, if not identical, and this is an extremely important point as it demonstrates how routine and standard this legislation and its provisions are and what they represent.

However, I would like now to conclude by talking about Hong Kong and here we will notice some minor variations on what I have laid out for Serbia and Namibia. Let me first talk about Canada's special relationship with Hong Kong. Our bilateral relationship with Hong Kong reflects long-standing and comprehensive political, commercial and people-to-people ties.

I should also note that even though Hong Kong is a special administrative region of the People's Republic of China, it is governed under the “one country, two systems” approach set out in the Basic Law, a document often referred to as the Hong Kong mini-constitution. Under this approach, Hong Kong is guaranteed its own legislature, legal and judicial systems and economic autonomy under a capitalist system and a way of life for at least 50 years.

Overall, the Basic Law provides Hong Kong with a degree of autonomy. Indeed article 151 of the Basic Law provides that Hong Kong may on its own conclude and implement an agreement with foreign states in fields such as economic, trade and financial fields, including tax treaties.

Canada and Hong Kong enjoy good co-operation on a large range of topics including public health, legal matters, and trade and investment. Relations are further bolstered by formal agreement initiatives on issues such as mutual legal assistance in criminal matters, air services, film and television co-operation and Internet learning. Canada and Hong Kong also enjoy productive co-operation in the context of multilateral organizations to which they are both members such as the Asia-Pacific Economic Co-operation forum, APEC, and the World Trade Organization.

In terms of trade with Canada, Hong Kong is the third largest financial market in Asia and an important source of foreign direct investment to Canada. As of 2011, Hong Kong was the second largest destination in Asia after Japan for Canadian foreign direct investment, larger than both China and India. Hong Kong is Canada's tenth largest export market and is also Canada's third largest export market in the world for beef and fourth largest market for fish and seafood.

In addition to natural resources and agricultural products, Canadian exports to Hong Kong include everything from telecommunications devices to train signalling systems, to educational and financial services. I should also note that the Canadian Chamber of Commerce in Hong Kong is one of the largest Canadian chambers outside Canada with over 1,200 members. There are over 180 Canadian companies in Hong Kong, 15 of which have established their regional headquarters in the city with a further 33 maintaining regional offices and 44 more with local offices.

Like Serbia and Namibia, the impetus for the agreement with Hong Kong signed on November 11, 2012, was to contribute to the elimination of tax barriers to trade and investment between Canada and Hong Kong and to help solidify the economic links between the two jurisdictions.

The new agreement also generally follows the pattern of other tax treaties already concluded by Canada and the OECD model, like Serbia and Namibia. The agreement also provides that where income, profits or gains may be taxed in both countries, the country of residence is to allow double tax relief against its own tax for the tax imposed by the country of source like Serbia and Namibia. The one variation is on resident taxation.

Unlike most jurisdictions, which tax their residents on their worldwide income, Hong Kong administers a territorial tax system under which residents and non-residents are taxed only on income arising in, or derived from, Hong Kong. Consequently, the residence articles of the treaty as regards Hong Kong reflects this state of affairs.

Capital gains are generally not taxable in Hong Kong, unless they are derived from a transaction in the nature of trade, in which case they are taxed as ordinary income at the regular applicable corporate or personal income tax rate. Moreover, there is no withholding tax imposed in Hong Kong on interest payments or dividend distributions made to non-residents.

Royalty payments made to non-residents are deemed to be taxable in Hong Kong if such payments are for the use of, or a right to use intangibles in Hong Kong or outside Hong Kong and where such royalty payments are deductible for income tax purposes in Hong Kong. In such cases, a withholding tax of 17.5% is imposed on 30% to 100% of the gross amount of the royalty payment.

For these reasons that I have highlighted today related to the three countries I have mentioned and many others, Bill S-17 will increase our ability to compete and to harness the opportunities of a vibrant, modern global economy. I urge the House to support this bill.

[Fighting Foreign Corruption Act, June 4th, 2013]

Mr. Speaker, I am quite pleased that the Rouge National Park was established as a park by our Conservative government. It is the first time that we actually brought the environment to an urban centre to show people the value of what the environment can do for us.

With respect to Kyoto, I was involved in that. I was in Japan at a time when the Kyoto accord was signed. At the time I thought that it was an impossible task. I wondered why we were signing onto it when there was no hope of ever meeting those standards. I think the Conservative government is much more realistic with the direction we are heading in for the environment.

[Fighting Foreign Corruption Act, June 4th, 2013]

Mr. Speaker, I thank the member opposite for her concern about the environment.

In all countries around the world, we need to balance the environment with the economy. If the economy is not working, it just means further degradation of the environment because there will be less money earned in the economy to do the work that we need to do.

We can see this throughout the development of the 18th and 19th centuries. People started using the environment for economic means, which meant a certain amount of degradation in the economy. We have now reached a point where we know that in a sustainable economy we now have the funds to go back and repair the wrongs of the past.