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HAVE AGREEDas follows:
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Paragraph 2 of Article 3 (General Definitions) of the Convention shall be deleted and replaced by the following:
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“2 As regards the application of the Convention by a Contracting State, at any time, any term not defined therein shall, unless the context otherwise requires, have the meaning which it has at that time under the law of that State concerning the taxes to which the Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.”
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Paragraph 1 of Article 4 (Resident) of the Convention shall be amended by adding the following sentence at the end of the paragraph:
The amended paragraph shall therefore read as follows:
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Paragraph 3 of Article 9 (Associated Enterprises) of the Convention shall be amended by deleting the word “five” and replacing it with the word “six”.
The amended paragraph shall therefore read as follows:
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1 Subparagraph (b) of paragraph 2 of Article 10 (Dividends) of the Convention shall be deleted and subparagraph (c) shall be renumbered as subparagraph (b).
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3 Paragraph 3 of Article 10 shall be renumbered as paragraph 4.
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4 Paragraph 4 of Article 10 shall be renumbered as paragraph 5 and the reference to “paragraphs 1 and 2” shall be replaced by “paragraphs 1, 2 and 3”.
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5 Paragraphs 5 and 6 of Article 10 shall be renumbered as paragraphs 6 and 7 respectively.
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6 Paragraph 7 of Article 10 shall be renumbered as paragraph 8 and the reference to “paragraphs 1, 2(c) and 4” shall be replaced by “paragraphs 1, 2(b) and 5”.
The amended Article 10 shall therefore read as follows:
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4 The term dividends as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights, not being debt-claims, participating in profits, as well as income which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.
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5 The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.
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6 Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company’s undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
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7 Notwithstanding any provision in this Convention, Canada may impose on the earnings of a company attributable to permanent establishments in Canada, tax in addition to the tax which would be chargeable on the earnings of a company incorporated in Canada, provided that the rate of such additional tax so imposed shall not exceed 5 per cent. For the purpose of this provision, the term earnings means the profits attributable to such permanent establishments in Canada (including gains from the alienation of property forming part of the business property, referred to in paragraph 2 of Article 13, of such permanent establishments) in accordance with Article 7 in a year and previous years after deducting therefrom:
The provisions of this paragraph shall also apply with respect to earnings from the alienation of immovable property in Canada by a company carrying on a trade in immovable property without a permanent establishment in Canada but only insofar as these earnings may be taxed in Canada in accordance with the provisions of Article 6 or paragraph 1 of Article 13.
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2 Paragraph 6 of Article 11 shall be amended by deleting the reference “The provisions of paragraph 1, 2, 3 and 4” and replacing it with “The provisions of paragraph 1, 2 and 3”.
The amended paragraph shall therefore read as follows:
“The provisions of paragraphs 1, 2, and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.”
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In subparagraph (c) of paragraph 3 of Article 12 (Royalties) of the Convention, the words “where the payer and the beneficial owner of the royalties are not related persons,” shall be deleted.
The amended subparagraph shall therefore read as follows:
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Subparagraph (c) of paragraph 1 of Article 22 (Elimination of Double Taxation) of the Convention shall be deleted and subparagraph (d) shall be renumbered as subparagraph (c).
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1 Paragraph 1 of Article 24 (Mutual Agreement Procedure) of the Convention shall be amended by deleting the word “two” and replacing it with the word “three”.
The amended paragraph shall therefore read as follows:
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2 Paragraph 2 of Article 24 of the Convention shall be amended by adding the following sentence at the end of the paragraph:
The amended paragraph shall therefore read as follows:
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3 Paragraph 3 of Article 24 of the Convention shall be amended by deleting the word “five” and replacing it with the word “six”.
The amended paragraph shall therefore read as follows:
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4 The following paragraphs 6 and 7 shall be added to Article 24 of the Convention:
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“6 Where,
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(b) the competent authorities are unable to reach an agreement to resolve that case pursuant to paragraph 2 within three years from the date upon which the information necessary to undertake substantive consideration for a mutual agreement has been received by both competent authorities or on another date as agreed by both competent authorities,
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Article 25 (Exchange of Information) of the Convention shall be deleted and replaced by the following provisions:
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1 The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes covered by the Convention, insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Article 1.
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2 Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the administration, assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to income or capital taxes. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both States and the competent authority of the requested State authorizes such use.
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3 In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:
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An Interpretative Protocol shall be added to the Convention with the following provisions:
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Have agreed at the signing of the Protocol amending the Convention between the Government of Canada and the Swiss Federal Council for the Avoidance of Double Taxation with respect to Taxes on Income and on Capital, done at Berne on 5 May 1997 (the “Convention”), on the following provisions, which shall form an integral part of the Convention:
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2 Regarding Article 25:
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