I think you're referring to the domestic law provision that allows exempt surplus to be repatriated free of tax if it comes from a jurisdiction with which Canada has a tax treaty, or a tax information exchange agreement.
The underlying tax policy reason for that provision is to ensure that Canadian corporations can compete competitively and pay the same level of taxes in the jurisdictions in which they are operating. There are rules around the foreign affiliates system to ensure that only active business income can be repatriated tax-free. Any income that is passive investment income is taxed on an accrual basis.