Canada and Luxembourg in tax pact

(September 10 – 15:30 ET) – Canada today signed a new tax treaty with Luxemborg, replacing a pact arranged in 1989.

Finance Minister Paul Martin says the deal was signed today in Luxembourg. Following the Model Double Taxation Convention prepared by the Organization for Economic Co-operation and Development the deal levies a 10% tax on interest and royalties, although software, patents and some other intellectual property is exempt. It also provides for a 15% tax on dividends, although that drops to 5% for entities that own more than 10% of the dividend-paying firm.

The deal will take effect in the calendar year following ratification by each country.