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4.3. Branch Profit (Deemed Remittance) Tax

The Income Tax Act imposes a 25% branch tax on the after-tax Canadian profits of a foreign corporation that are not reinvested in Canada. Many of Canada’s tax treaties provide for reduction to or relief from the branch profits tax. Note that the Canadian tax authorities are of the opinion that tax transparent US LLCs with non-corporate members are not eligible for the reduction of the branch profit tax under the Canada-US tax treaty. For further details, see Sec. 8.2.1.