Corporate Tax Planning: Canadian Inbound Investment After the MLI

The multilateral instrument (MLI), developed by the Organisation for Economic Co-operation and Development and the Group of Twenty as part of the base erosion and profit shifting initiative was signed by Canada and more than 60 other signatories in 2017 and came into force in July 2018. The MLI introduces significant tax treaty changes that may have the effect of materially altering the tax-planning opportunities available for investing in Canada. This article sets out a brief review of the Canadian case law on the application of tax treaties in relation to investing in Canada, a summary of the treaty changes for Canada contemplated by the MLI, and some anticipated effects on the structuring of investments into Canada. The authors focus on the practical issues that taxpayers face in relation to inbound investment following Canada's ratification of the MLI.