The tax advantage enjoyed by Canadian businesses has long been an attraction for U.S. investors. There's little doubt, though, that heightened international tax competition would have enormous implications for this country; indeed, the games may have already begun, as Britain has been dropping its corporate-tax rate dramatically. Foreign investment in Canada could suffer.
U.S. tax reform could also affect transfer pricing, as multinationals try to structure intracompany transactions so that expenses accrue in the country with the higher tax rate.
Needless to say, opinionists and tax lawyers both will be paying close attention. For companies with operations in both Canada and the United States, or indeed with customers in both countries, the future may be challenging.
Lexpert contributor Julius Melnitzer reports at www.lexpert.ca.
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