HIGHLIGHTS OF NEW CANADA PROTOCOL

The U.S. and Canada recently signed a 5th Protocol (amendment) to their income tax treaty. Highlights of the Protocol include:

1. Zero Withholding on Interest Payments. The current Treaty provides for a 10% withholding rate on cross-border interest payments. This is reduced to 0% under the new Protocol.
2. Arbitration. The Protocol provides for mandatory arbitration procedures for disputes with regard to certain Treaty provisions.
3. Transparent Entities. The Protocol has provisions allowing for reduced Treaty rates when transparent entities (such as LLC's) are involved.

The Protocol needs to be ratified by the U.S. Senate and and the Canada Parliament before it enters into force.