Proceedings of the Standing Senate Committee on
Foreign Affairs

Issue 20 - Sixth Report of the Committee

Thursday, May 28, 1998

The Standing Senate Committee on Foreign Affairs has the honour to present its

SIXTH REPORT

Your committee, to which was referred the Bill S-16, An Act to implement an agreement between Canada and the Socialist Republic of Vietnam, an agreement between Canada and the Republic of Croatia and a convention between Canada and the Republic of Chile, for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, has examined the said Bill in obedience to its Order of Reference dated Tuesday, May 12, 1998, and now reports the same without amendment, but with observations.

The committee has two specific concerns. First, committee members propose that, in advance of the government of Canada presenting similar legislation in the future, the Department of Foreign Affairs and International Trade assure the Senate of Canada that it has conducted pre-screening of signatory countries' institutional capacity to implement successfully the provisions of the relevant agreements and conventions.

Second, a key component of the tax agreements and conventions included in Bill S-16 is an exchange of information between tax authorities in Canada and those in the other signatory countries. This transfer of data can be a useful tool with which countries can minimize or even prevent tax evasion. While recognizing the merits of such an information exchange, the Committee has some concern that the information in question may, in some instances, be improperly used in some countries. The committee suggests that the government of Canada, when seeking the enactment of similar bills, provide the Senate, through the Committee to which the bills are sent, with any information available to the Government about inappropriate use of tax information exchanged as a result of tax agreements and conventions entered into by Canada. Also, the committee encourages the Government of Canada to attempt to ensure that an adequate level of privacy is accorded the tax information shared by Canada with the other signatory countries.

Respectfully submitted,

John B. Stewart

Chairman