TEI files pre-budget consultation statement.

• Position: Tax Executive Institute

On August 6, 2014, Tax Executives Institute submitted a written statement to the House of Commons Standing Committee on Finance in connection with the 2014 pre-budget consultations in Canada. The Institute's statement was prepared under the aegis of its Canadian Income Tax Committee, whose 2014-2015 chair is Grant L. Lee of HSBC Bank Canada. The preparation of the statement was coordinated by Jeffery P. Rasmussen of the Institute's legal staff. In prior years, the Standing Committee has invited the Institute to participate in pre-budget consultation hearings and expand upon the recommendations set forth in the written statement.

Tax Executives Institute (TEI) is pleased to participate in this year's pre-budget consultations and offers the following recommendations to ensure fiscal sustainability, promote economic growth, and maintain a favourable investment climate. Our recommendations will improve Canada's taxation regime, streamline tax administration, and enhance the competitiveness of Canada's tax system.

Background

Tax Executives Institute is the preeminent worldwide association of in-house business tax professionals. TEI's 7,000 members work for 3,000 of the largest companies in Canada, the United States, Europe, and Asia, with representatives from all major industries and sectors of the economy. Canadians make up approximately 15 percent of TEI's membership and belong to chapters in Montreal, Toronto, Calgary, and Vancouver. In addition, many non-Canadian members work for companies with substantial Canadian operations, investments, and employees.

Executive Summary

TEI urges the Standing Committee to:

* Maintain the reduced corporate income tax rates implemented over the last decade, encourage the provinces to reduce their rates and continue harmonizing their tax bases with the federal base, and adopt measures increasing electronic filing of tax return information.

* Finish unfinished business from the Advisory Panel on Canada's System of International Taxation by--

** Adopting a self-certification system under Canada's treaties for withholding tax exemptions on cross-border services; and

** Eliminating withholding taxes on corporate group dividends.

* Recognize that Canada has implemented measures curbing base erosion and profit shifting (BEPS) and thus "Go Slow" adopting recommendations from the Organisation for Economic Co-operation and Development's (OECD's) BEPS initiative.

* Improve the efficiency of tax dispute resolutions by according Canada Revenue Agency (CRA) authority to settle issues based on "risks of litigation."

Maintain and Enhance the Competitiveness of Canada's Tax Structure

The Government's commitment to decreasing the corporate income tax rate and broadening the tax base over the past decade has made the Canadian tax system globally competitive. TEI commends the Government for pursuing these objectives, thereby increasing Canada's attractiveness to investors. These measures helped Canada weather the global recession better and recover faster than many countries. But Canada must remain vigilant about maintaining its competitive advantage because other countries (e.g., the United Kingdom) are...