The taxation of permanent establishments in the Canadian offshore

This study examines the application of the permanent establishment concept from a Law and Economics perspective as it is applied in Canada's bilateral tax treaties and domestic income tax law with reference to the offshore natural resource developments in Eastern Canada. The author argues that as a consequence of Revenue Canada-Taxation's aggressive interpretation of the permanent establishment provisions in Canada's tax treaty network, great uncertainty exists for any foreign enterprises contemplating business operations in the Canadian offshore. The author identifies efficiencies for business in the application of the concept and recommends that Canada should renegotiate her tax treaty network to reflect Revenue Canada's assessing policies.