On May 4, 2011, the Canada Revenue Agency (CRA) issued a technical interpretation (2010-039154) on whether two US companies would be deemed to have a permanent establishment (PE) in Canada for purposes of Article V(9)(b) of the Canada-US Tax Treaty. The CRA Rulings Directorate provided additional comments on that article at the International Fiscal Association (IFA) seminar held on May 19, 2011, in Toronto.
The inclusion of a services PE provision is limited to Canada’s treaties with the US and Mexico. The CRA’s views with respect to a services PE would not apply to other treaties, which instead would determine PE status using the usual PE principles.
Read this Tax memo for details on PwC’s observations and the CRA’s views.