LEGAL COUNSEL FOR TAX PLANNING + TRANSACTIONS
Taxes play an important role in the global economy, and as such have become a necessary evil in the corporate business world. For whereas every business must pay its requisite tax liability, there is nothing that requires a company to pay in excess of what the law requires. As such, structuring one's business operations and commercial transactions to minimize taxes, when done in compliance with applicable laws and regulations, is an intelligent exercise in business and financial management.
Meeting this challenge, such that your company remains compliant with pertinent tax laws, regulations and legal interpretations thereof, while optimizing its profitability, is an undertaking that should be pursued in conjunction with knowledgeable tax lawyers who are committed to the dual pursuits of strict legal compliance and permissible tax minimization strategies. Attempting to undertaking tax structuring that is not compliant with the law is a recipe for disaster and should not be the route of any business.
The reality is that tax authorities the world-over are becoming increasingly effective in detecting and pursuing deceptive and illegal tax-related activity, with the penalties being significant and the disposition of those misappropriate tax savings making it exceedingly difficult to repay those tax authorities the taxes that are owing, together with interest and penalties. As such, tax compliance needs to be an integral component of corporate tax strategy.
Neufeld Legal P.C.
At Neufeld Legal P.C., we work with corporate businesses to optimize, strategize and implement both long-term and transactional tax planning; however, we do not undertake tax litigation or tax disputes. Our legal team works on proactive tax measures, as opposed to reactive tax matters where previously developed and implemented tax matters come under legal scrunity by the relevant tax authorities.
To learn how we can be of assistance, contact Neufeld Legal P.C. by telephone at 416-887-9702 (Toronto + Ontario); 403-400-4092 (Calgary + Alberta); 646-663-5567 (New York City); or email at Tax@NeufeldLegal.com.
Business Profits - US Canada Tax
1. The business profits of a resident of a Contracting State shall be taxable only in that State unless the resident carries on business in the other Contracting State through a permanent establishment situated therein. If the resident carries on, or has carried on, business as aforesaid, the business profits of the resident may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where a resident of a Contracting State carries on, or has carried on, business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the business profits which it might be expected to make if it were a distinct and separate person engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the resident and with any other person related to the resident (within the meaning of paragraph 2 of Article IX (Related Persons)).
3. In determining the business profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere. Nothing in this paragraph shall require a Contracting State to allow the deduction of any expenditure which, by reason of its nature, is not generally allowed as a deduction under the taxation laws of that State.
4. No business profits shall be attributed to a permanent establishment of a resident of a Contracting State by reason of the use thereof for either the mere purchase of goods or merchandise or the mere provision of executive, managerial or administrative facilities or services for such resident.
5. For the purposes of the preceding paragraphs, the business profits to be attributed to a permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
6. Where business profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.
7. For the purposes of the Convention, the business profits attributable to a permanent establishment shall include only those profits derived from the assets or activities of the permanent establishment.