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Bill S-3

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	SUMMARY
	The purpose of this enactment is to implement income tax treaties - income tax conventions or agreements and protocols thereto - that have been concluded with Kyrgyzstan, Lebanon, Algeria, Bulgaria, Portugal, Uzbekistan, Jordan, Japan and Luxembourg.
	Income tax treaties have two main objectives: the avoidance of double taxation and the prevention of fiscal evasion. Since they contain taxation rules that are different from the provisions of the Income Tax Act, they can become effective only if an Act giving them precedence over domestic legislation is passed by Parliament.
	The income tax treaties in this enactment are generally patterned on the Model Double Taxation Convention prepared by the Organisation for Economic Co-operation and Development.
	Parts 1 to 7 of this enactment implement tax treaties with Kyrgyzstan, Lebanon, Algeria, Bulgaria, Portugal, Uzbekistan and Jordan. This is the first time that Canada has concluded a tax treaty with any of these States.
	Part 8 of this enactment amends the Canada-Japan Income Tax Convention Act, 1986 and implements a protocol amending the existing tax convention with Japan. The protocol specifically addresses an issue relating to Japanese local enterprise taxes by providing for an exemption for Canadian enterprises operating ships or aircraft in international traffic, provided that Canadian provinces do not subject similar Japanese enterprises to similar taxes. The protocol also provides for a further reduction in the withholding tax on inter-company dividends to five per cent, in accordance with the government's intention to move to that rate with all parties with whom Canada negotiates tax treaties. As well, the protocol clarifies and modernizes the language of a number of provisions of the convention.
	Part 9 of this enactment implements a tax convention which replaces the existing tax convention between the Government of Canada and the Government of the Grand Duchy of Luxembourg, signed on January 17, 1989. The wording in the new convention clarifies and modernizes the language, better reflecting Canada's tax treaty policies.