Canada’s International Tax System: Historical Review, Problems and Outlook for the Future

Canada in International Law at 150 and Beyond Paper No. 8

Brian J. Arnold
Series: Canada in International Law at 150 and Beyond/Canada et droit international : 150 ans d’histoire et perspectives d’avenir
February 16, 2018

This paper provides an overview and assessment of the international aspects of Canada’s income tax system at the time of Canada’s sesquicentennial. The timing for such a review is particularly appropriate for three main reasons: 2017 was also the 100th anniversary of the Income Tax Act; the international community, including Canada, has recently completed a major overhaul of the international tax rules to prevent base erosion and profit shifting; and, in late 2017, the United States adopted a major tax reform with important changes to its international tax rules. These US changes, including the deep reduction in the US corporate tax rate from 35 to 21 percent, are game-changing for Canada and many other countries, and Canada needs to respond quickly. Neither a primer on Canada’s international tax rules, nor a detailed technical analysis of those rules, this paper takes a broad approach to Canada’s international tax system.

Part of Series

Canada in International Law at 150 and Beyond/Canada et droit international : 150 ans d’histoire et perspectives d’avenir

Marking 150 years since Confederation provides an opportunity for Canadian international law practitioners and scholars to reflect on Canada’s past, present and future in international law and governance. This series of essays, written in the official language chosen by the authors, that provides a critical perspective on Canada’s past and present in international law, surveys the challenges that lie before us and offers renewed focus for Canada’s pursuit of global justice and the rule of law. The project leaders were Oonagh E. Fitzgerald, director of the International Law Research Program at the Centre for International Governance Innovation (CIGI); Valerie Hughes, CIGI senior fellow, adjunct assistant professor of law at Queen’s University and former director at the World Trade Organization; and Mark Jewett, CIGI senior fellow, counsel to the law firm Bennett Jones, and former general counsel and corporate secretary of the Bank of Canada. The series was published as a book titled Reflections on Canada’s Past, Present and Future in International Law/Réflexions sur le passé, le présent et l’avenir du Canada en matière de droit international in spring 2018.

About the Author

Brian J. Arnold

Brian J. Arnold is senior adviser at the Canadian Tax Foundation in Toronto.

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