The multilateral instrument (MLI) must be read alongside Canada's tax treaty with China for withholding tax purposes as of January 1, 2023, as China completed domestic procedures and deposited its MLI ratification instrument with the Organization for Economic Co-operation and Development (OECD). The MLI must also be read alongside the Canada-China tax treaty for all other taxes for taxable periods beginning on or after March 1, 2023.


The OECD developed the MLI as part of Action 15 of its base erosion and profit shifting (BEPS) initiative to modify existing bilateral treaties to implement BEPS measures. The MLI entered into force in Canada on December 1, 2019 and began to affect a significant portion of Canada's treaties beginning in 2020. Specifically, Canada indicated that the MLI would cover its treaties with 84 countries, and 70 of these countries reciprocated by listing their tax treaty with Canada as a covered treaty when signing on to the MLI. As of the OECD's last update on May 25, 2022, the MLI affects (or will soon affect) 46 of Canada's tax treaties. In addition, the application date of the MLI to Canada's treaties with Sweden, Estonia, Spain and Romania is not yet available, although these countries have also deposited their ratification instruments with the OECD but have not yet notified the OECD that they have completed the appropriate domestic procedures to confirm the effective date.

Additional treaties may be affected as Canada's covered treaty partners continue to deposit their MLI instruments of ratification with the OECD.

For more information, contact your KPMG adviser.

Information is current to May 30, 2022. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500