Frequently Asked Questions About Tax Information Exchange Agreements
Why is Canada signing tax information exchange agreements?
The signature of a tax information exchange agreement (TIEA) is consistent with the efforts of the Organisation for Economic Co-operation and Development (OECD) to implement the effective exchange of tax information to combat international tax evasion—an initiative endorsed by the G-20.
The Government of Canada regards the ability to exchange tax information between countries as an important means of improving the ability of tax authorities to administer and enforce tax laws in order to prevent international tax evasion.
TIEAs also strengthen bilateral ties between signatory countries by enabling the tax authorities of both jurisdictions to co-operate in the exchange of tax information.
How does a TIEA work?
A TIEA is a bilateral agreement pursuant to which two countries undertake to exchange tax information relevant to the administration and enforcement of their domestic tax laws as a way of fighting international tax evasion.
TIEAs concluded by Canada all incorporate the OECD standard on exchange of tax information. Under a TIEA, a jurisdiction can be requested to exchange tax information if it is needed by the other country to administer its own tax laws.
In Canada, TIEAs are administered by the Canada Revenue Agency.
By improving the ability of the Canadian tax authorities to enforce Canadian tax laws, TIEAs protect the revenues of the federal and provincial governments, as well as the integrity of the tax system.
How are privacy concerns addressed?
TIEAs contain robust provisions to ensure that taxpayers’ information is treated as confidential, and that it can only be used by the tax authorities for the purposes of applying tax laws. TIEAs are fully consistent with existing confidentiality provisions contained in Canadian tax laws.