Bill C-82 (Historical)

Multilateral Instrument in Respect of Tax Conventions Act

An Act to implement a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting

This enactment implements a multilateral instrument in respect of conventions for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.
The multilateral instrument is an international treaty developed as part of the G20 and OECD’s project to tackle base erosion and profit shifting (BEPS). The purpose of the multilateral instrument is to modify, in their application, tax conventions between two or more parties to the multilateral instrument so as to further the objectives of the tax convention. The multilateral instrument operates alongside tax conventions to modify them in their application; it does not directly modify the text of the tax conventions. The multilateral instrument will apply to a Canadian bilateral double tax convention only if both parties to the convention notify the depositary that the convention is intended to be covered by the multilateral instrument. The Secretary-General of the OECD is the depositary of the multilateral instrument. The implementation of the multilateral instrument requires the enactment of this Act.

Multilateral Instrument in Respect of Tax Conventions Act

[Ginette Petitpas Taylor, Liberal, Moncton—Riverview—Dieppe, NB]

moved that Bill C-82, An Act to implement a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting, be concurred in.

The House proceeded to the consideration of Bill C-82, An Act to implement a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting, as reported (without amendment) from the committee.

[The Chair, Liberal, Wayne Easter]

I do believe those are all of the questions we have.

Mr. McGowan and Ms. Smith, thank you very much for coming and appearing as witnesses and answering our questions.

With that we will go to committee business. We don't really need to suspend because this is public as well. I think there are really three items that we have to deal with. One is whether as Bill S-6 goes forward we are going to want further witnesses. We'll have to establish the deadlines on that, with or without witnesses, and a proposal on that depending on where people want to go.

Second, and maybe we'll deal with this first, there's a budget that we need to vote on for the hearings on Bill C-82, which are already done. We had to pay for those witnesses.

Third is the chair's ruling on the February 21 meeting. I think Mr. Richards had a question on that.

Maybe we could start with the budget. The other thing I should mention is that I do believe we need to hold a subcommittee meeting as soon as possible next week. Hopefully by that time we'll know where things are at on the budget implementation act. We'll have to schedule out where we want to go through to June, I expect.

On the project, there's a request for the budget. The amount requested to do the study on Bill C-82, an act to implement a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting, was $3,500. Do we have a motion to that effect?

That is moved by Mr. Fergus.

(Motion agreed to)

On Bill S-6, do we envisage having witnesses or not? That would make a difference. We had much the same as for Bill C-82. Do people, members, think that we will be bringing forward further witnesses on this tax treaty, similar to the case with Bill C-82 or not?

I'll give people a few minutes to think about it, because that will determine when we will have to establish deadlines.

While you're thinking about it, I'd put it this way. If there are no witnesses, we'll propose amendments by April 4, the amendment deadline. On April 9 we'll do clause-by-clause. If there are witnesses, we'll have to go to April 4 as the witness deadline. On April 9, we'll hear from witnesses and April 16 will be the amendment deadline. On April 30 we'll go to clause-by-clause. That's the difference. It's entirely up to committee.

Go ahead, Tom.

[Michael McLeod, Liberal, Northwest Territories, NT]

That is Bill C-82.

[Trevor McGowan]

Thank you for the question. I would be happy to.

This bill relates to a bilateral tax agreement between Canada and Madagascar. It's intended to both improve the administration of our tax system and reduce barriers to trade between two countries on a bilateral basis.

The base erosion and profit shifting project was born out of a multilateral effort to deal with global tax avoidance—the base erosion, profit shifting and moving income around. It was determined as part of that process that a number of bilateral tax treaties, such as with Madagascar.... Of course, we have them with 93 countries; this would be the 94th. Renegotiating all of those bilateral treaties would take a tremendous amount of time and effort by all of the countries involved. The multilateral instrument is itself a treaty. It serves to modify the application of existing bilateral treaties, so it can update a large number of treaties all at once by virtue of being entered into by a number of countries on a multilateral basis.

Here in Bill S-6 we have a bilateral income tax convention. The MLI in Bill C-82 affects and updates the application of Canada's existing multilateral treaty networks, as well as the networks of the other participants in the MLI.

[Michael McLeod, Liberal, Northwest Territories, NT]

We have this bill in front of us, and there's another bill, Bill C-82, which is supposed to prevent base erosion and profit shifting. Can you explain the difference and why there was a need to have these two separate bills?

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you, Mr. Chair. I'm happy to ask a few questions.

I want to thank the officials for joining us today to answer our questions on Bill S-6.

Does the convention proposed in Bill S-6 reflect the text of the multilateral convention in Bill C-82? I'm afraid that we're working for nothing, and that the convention in Bill S-6 isn't the same as the multilateral convention and will therefore need to be updated in the near future. Is it the same text? Otherwise, why not speed up the process and avoid an update in a few years?

Finance

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Mr. Speaker, I have the honour to present, in both official languages, the 28th report of the Standing Committee on Finance concerning Bill C-82, an act to implement a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting. The committee has studied the bill and has decided to report the bill back to the House without amendment.

[The Chair, Liberal, Wayne Easter]

That deals with Bill C-82.

Thank you, gentlemen, for coming and answering our questions. We went a little far astray on relevance there, but that's all right. I believe you're going to get back to us with some information, Mr. McGowan.

With that—

[The Chair, Liberal, Wayne Easter]

Now, turning to clause-by-clause study of Bill C-82, pursuant to Standing Order 75(1), consideration of clause 1, the short title, is postponed.

(Clauses 2 to 6 inclusive agreed to on division)

Shall the schedule carry?

(Schedule 1 agreed to on division)

Shall the short title carry?

[The Chair, Liberal, Wayne Easter]

We will have it at another time. I think it's more appropriate that we deal with Bill C-82.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

I need 30 seconds, Mr. Chair. Thank you.

On a point of order, I do want to put on the record that Bill C-82 on base erosion and profit shifting came forth from exhaustive negotiations between 2013 and 2015 under the prior Conservative government. Now we're finally passing the legislation, or going through it here in committee.

Hopefully, legislation will be passed and put into place so we can ensure that Canadian corporations—all of them, much like their counterparts all over the world—benefit from this agreement, but also so Canadian citizens benefit from this agreement, in that all corporations are paying their fair share of taxes. That's something that I know our side wants. I'm not sure why the other side does not see it that way. Our side sees it that way.

I'll stop there, Chair, and Bill C-82—

[Trevor McGowan]

I can only speak to my personal knowledge, certainly not to any of the conversations between our minister's staff and anyone not in the department.

To answer your question, I'm not aware of any mention of SNC-Lavalin in the context of Bill C-82.

You asked, though, whether there could be any benefit under Bill C-82 for companies like SNC-Lavalin, Canadian companies competing abroad.

Of course there would be benefits under Bill C-82 for Canadian businesses. One that comes to mind is the improved dispute resolution process contained in the bill, including the mandatory binding arbitration, which can provide certainty for affected businesses involved in tax disputes with other jurisdictions that have also adopted that standard—not so much certainty as to what the outcome will be, but that in a binding arbitration there will be final resolution of a tax dispute and within a defined time period.

There are, then, benefits in this bill for Canadian businesses competing abroad, but they are of a general nature.

[Blake Richards]

Thank you, Mr. Chair, and it will, I assure you.

She said, “These events involved 11 people...from the Prime Minister's Office, the Privy Council Office, and the office of the Minister of Finance. These included in-person conversations, telephone calls, emails and text messages.”

Further on she indicated, “...on September the 19, I spoke to Minister Morneau on this matter when we were in the House. He again stressed the need to save jobs, and I told him that engagements from his office to mine on SNC had to stop, that they were inappropriate.

She said, “They did not stop. On September 20, my chief of staff had phone calls with Mr. Chin and Justin To, both members of the Minister of Finance's office, about DPAs and SNC.”

Those are the relevant quotes, because they obviously reference the Minister of Finance or his office in what Jody Wilson-Raybould and, I think, many Canadians would term as inappropriate efforts to try to advocate on behalf of SNC-Lavalin.

My question—and this is where the relevance comes in—is in relation to Bill C-82. Obviously, if the Minister of Finance and his staff felt somehow compelled to inappropriately lobby and pressure the then-Minister of Justice and Attorney General on behalf of and in trying to do something to benefit SNC-Lavalin in regard to the deferred prosecution agreements, one would have to wonder, would they then be willing to do the same on something such as Bill C-82?

The question would be, do you see anything in Bill C-82 that would potentially be of benefit to a company like SNC-Lavalin?

Also, was there ever any representation from the Minister of Finance or his staff made to you or any other officials in the Department of Finance related to Bill C-82 and with relevance to SNC-Lavalin?

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

To cite one of the first countries on the alphabetical list, Barbados merely signed the convention on January 24 but has done nothing since then. Time will tell whether it's serious about its actions and whether it will bring the convention into force. Otherwise the current system will prevail, as you confirmed earlier.

Approval of Bill C-82 is a step in the right direction, but our committee must be realistic and understand that the new convention will apply solely to those countries that take the necessary action on their end.