On August 29, 2019, Canada deposited its instrument of ratification with the Depositary of the Multilateral Instrument (“MLI”). Essentially, the MLI will override Canada's bilateral tax treaties in certain respects. Its provisions follow-through on certain measures introduced by the OECD that are intended to prevent multinationals from base erosion and profit shifting ("BEPS").
The MLI will enter into force in Canada on December 1, 2019, and will apply to certain tax treaties as early as January 1, 2020. Article 35 of MLI contains the coming into force provisions. For tax withheld at source, the MLI applies as of the first day of the calendar year following the year in which the latest of the dates that the MLI comes into force in a contracting jurisdiction. In other words, for tax withheld at source, the MLI applies as of January 1, 2020 to any tax treaty that Canada has with a jurisdiction where the MLI came into force in 2019 or earlier. Generally, for all other taxes levied, the MLI applies to taxable periods beginning on or after the expiration of the period that is sixth months after the latest of the dates that the MLI comes into force in a contracting jurisdiction. That said, Article 35 contains many other provisions for the coming into force of the other various aspects of the MLI. A complete list of the coming into force dates for all jurisdictions can be found HERE.