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47 Can. Tax J. 1321 (1999)
Non-Residents Rendering Services in Canada: Regulation 105 and Other Issues

handle is hein.journals/cdntj47 and id is 1437 raw text is: International Tax Planning Co-Editors: Carl F. Steiss and Nick Pantaleo* NON-RESIDENTS RENDERING SERVICES IN CANADA: REGULATION 105 AND OTHER ISSUES Shannon L. Baker and Dale S. Meister** Regulation 105 to the Income Tax Act requires Canadian taxpayers to withhold 15 percent of all payments to a non-resident made in consideration for services rendered in Canada. The withholding is an instalment of the non-resident's potential Canadian income tax liability. If the non-resident can establish that it is eligible for an exemption from Canadian tax under the relevant tax treaty, the with- holding will be refunded. In this article, the authors examine the current developments in respect of regulation 105, including the increased attention that the Canada Customs and Revenue Agency is paying to non-residents rendering services in Canada. The authors also review recently finalized guidelines for the issuance of waivers to avoid withholding. INTRODUCTION Tax policies ... are driven by two important objectives: domestic economic growth and job creation on the one hand, and the protection of the Canadian revenue base on the other. .. A major constraint is the need to balance domestic considerations against international realities over which Canada has little control.' As the above quotation indicates, the Department of Finance faces a diffi- cult task when drafting tax legislation to be enforced by the Canada Customs and Revenue Agency (hereinafter Revenue Canada). That task is further complicated by the rapid globalization of businesses and the growth of e-commerce. Canadian businesses and non-residents doing busi- ness in Canada are directly affected by the government's tax policy decisions and the legislation enacted to enforce those decisions. Conse- quently, it is important that businesses monitor the development of * Of PricewaterhouseCoopers, LLP, Toronto. ** Of PricewaterhouseCoopers, LLP, Calgary. Canada, Report of the Technical Committee on Business Taxation (Ottawa: Department of Finance, April 1998), 6.1. (1999), Vol. 47, No. 5/no 5 1321

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