The policy reason, in general, for not applying the permanent establishment provisions through the MLI is that they are very detailed, with very complicated compatibility clauses. Because Canada has such a large treaty network, we were concerned about the complexity and uncertainty it would create through its impact on the particular tax treaties. Because we have a large treaty network, with some of our treaties dating back to 1975, the permanent establishment provisions in particular differ significantly throughout our tax treaty network, and the impact on all those provisions was not clear.
Another reason was that, compared with the other provisions in the MLI, relatively few countries picked up these provisions, and so we would not have had a match with very many treaty partners in respect of these provisions. To the extent that we would have had a match, it may not necessarily have been in Canada's favour to have these provisions. In many cases we would have been the resident's country relative to the other country. That speaks mostly to articles 12 and 13. With respect to article 10 relating to permanent establishments situated in third jurisdictions, that is not a situation that Canada encounters very often. It's a function of how our domestic law works. This typically has not been a problem with respect to Canada's tax treaties.
The fact that these provisions are not incorporated via the MLI does not mean that at some point in the future Canada could not take a different decision and incorporate them through the MLI. It also does not preclude the integration of these provisions in a future bilateral update to the tax treaty.
I note that in respect of the OECD model tax convention, where these provisions are included, there are no reservations from Canada in respect of the policy of these provisions.