Canada Withholding Law Stirs Disputes With U.S. Companies: Taxes
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U.S. companies that temporarily station workers in Canada are finding it hard to avoid that nation’s withholding tax, and delays in obtaining waivers from it may be hurting the Canadian economy, tax preparers say.
Under an income tax treaty between the two countries, U.S. businesses that don’t have a “permanent establishment” in Canada are exempted from a 15 percent withholding tax on employees working there on a temporary basis. The companies must obtain tax waivers from the Canada Revenue Agency in advance, though, and that process is proving increasingly difficult, Bloomberg BNA reports.