OTTAWA – Prime Minister Stephen Harper and Polish Prime Minister Donald Tusk today witnessed the signing of a new tax convention that will reduce tax barriers and encourage increased trade and investment between the two countries.

“ Canada is committed to strengthening its relationship with Poland by fostering an environment that will encourage growth and long-term prosperity for both countries,” said Prime Minister Harper. “The new tax convention is a step in the right direction, as it will help reduce tax barriers, and support increased bilateral trade and investment.”

The new tax convention will replace the 1987 Tax Convention between Canada and Poland to better reflect current Canadian and international tax convention policies. In particular, the new tax convention lowers the maximum rate of withholding tax imposed on dividends paid between companies, and on interest payments.

Consistent with the Government of Canada's policy announced in Budget 2007 to combat international tax evasion, the updated tax convention also includes provisions reflecting the standard developed by the Organization for Economic Co-operation and Development (OECD) for the effective exchange of tax information.

Canada currently has tax conventions in force with 89 countries. The signature of this new tax convention with Poland reflects the efforts of the Government of Canada to update its tax convention network.

This document is also available at http://pm.gc.ca

Backgrounder

SIGNATURE OF A NEW TAX CONVENTION WITH POLAND

The Government of Canada is committed to reducing tax barriers and encouraging increased bilateral trade and investment in order to create conditions for jobs and long-term growth. To this end, on May 14, 2012, Prime Minister Stephen Harper announced the signing of a new tax convention between Canada and Poland , which will help promote trade and investment between the two countries.

The current Canada-Poland Tax Convention was signed in 1987. Since then, Canada ’s tax convention and domestic tax policies, and internationally accepted tax convention standards, have evolved.

The new tax convention will include modernized provisions that conform to current Canadian and international tax treaty policies, which is based on the Model Tax Convention on Income and on Capital developed by the Organization for Economic Co-operation and Development (OECD).

More specifically, the new tax convention will:

* Further reduce tax barriers in order to encourage trade and investment between Canada and Poland ;
* Lower the maximum rate of withholding tax on dividends paid between companies from 15% to 5% and on interest payments from 15% to 10%;
* Ensure the elimination of double taxation for individuals and companies doing business or earning income in the other country.

The new tax convention, which will replace the 1987 Tax Convention, will come into force once it has been ratified by both countries.

Canada has a wide network of tax conventions in force with 89 countries. The Government of Canada is committed to keeping its tax conventions updated and to negotiating new tax conventions, where warranted, to support the competitiveness of Canadian businesses abroad as well as to attract investment to Canada .

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