On 24 November 2016, officials from Canada and Madagascar signed an income tax treaty. The treaty is the first of its kind between the two countries.
The treaty covers Canadian income taxes imposed by the Government of Canada under the Income Tax Act. It covers Malagasy tax on income, synthetic tax, direct tax on hydrocarbons, tax on salaries and assimilated income, tax on income from movable assets, and tax on gains from immovable property.
If a company is considered resident in both Contracting States, the competent authorities will determine the company's residence for the purpose of the treaty through mutual agreement. If no agreement is reached, the company will not be entitled to claim any relief or exemption from tax provided by the treaty.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Both countries apply the credit method for the elimination of double taxation.
Article 27 (Miscellaneous Rules) includes the provision that the treaty will not apply to any company, trust, or other entity that is resident of a Contracting State if:
Article 27 also includes the provision that the treaty will not apply to a company or other entity that is entitled to income tax benefits pursuant to any legislation in either Contracting State relating to promotion of increased economic activity (including legislation providing for tax-free zones), unless:
The treaty will enter into force once the ratification instruments are exchanged and will apply from 1 January of the year following its entry into force.
We’re here to answer any questions you have about the Orbitax products and services.
We’re committed to providing high value, low cost tax research and management solutions.
Our Twitter account is where you can find latest information, news updates, offers and lots more.