The following Notice of Tax Treaty Developments has just been posted on the Finance Canada Site.
Tax Convention Signed Between Canada and the Republic of Korea
Signature de la Convention fiscale entre le Canada et la RÃ©publique de CorÃ©e
A new Convention between Canada and the Republic of Korea for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income was signed on September 5, 2006, in Ottawa.
The Convention limits the rate of withholding tax to 5% for dividends between affiliated companies, to 15% for dividends in all other cases, to 10% for interest, and to 10% for royalties.
The Convention will enter into force once Canada and Republic of Korea have notified each other that all the necessary measures to give the Convention the force of law in their respective countries have been completed. The Convention will have effect, in respect of tax withheld at source on amounts paid or credited to non-residents, on or after the first day of January in the calendar year next following that in which the Convention enters into force; and, in respect of other taxes, for taxation years beginning on or after the first day of January in the calendar year next following that in which the Convention enters into force.
The existing Convention between Canada and Korea, signed at Seoul on February 10, 1978, shall cease to have effect from the dates on which the new Convention becomes effective.
For further information contact:
Tax Legislation Division
Phone: (613) 992-5864