Canada and the exchange of tax information

The multilateral convention entered into force on April 1, 1995 when it was ratified by Denmark, Finland, Norway, Sweden and the United States. The Convention was subsequently amended by the 2010 Protocol in accordance with the OECD’s international standard on information exchange for tax matters, and its signature was open to all jurisdictions^[4].

Canada signed the original convention in 2004 and ratified the amended convention on November 21, 2013, with entry into force in 2014^[5].To date, 151 jurisdictions are parties to the amended Convention; it is in force in 144 countries or territories^[6].

This multilateral agreement consolidates the standard for exchange of information on request and establishes a framework for the development of an automatic exchange standard. It provides mechanisms for the exchange of tax information upon request, as well as spontaneous and automatic exchanges. Article 6 allows the competent authorities of the parties to mutually agree on the procedures to be followed in the context of automatic exchange of information for tax matters^[7]. The Convention also specifies provisions common to various forms of assistance, including the information to be provided by the requesting state, the response to the request for assistance, and the limits to the obligation to provide assistance. Notably, one key difference between the original and amended versions is the suppression of the article that allowed parties to decline a request for assistance.

Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information

In 2013, following the implementation of the Foreign Account Tax Compliance Act (FATCA), which established the automatic exchange of information between the United States and several countries, including major European countries and Canada, the OECD began developing a common reporting standard for the automatic exchange of financial account information^[8]. In 2014, more than 50 jurisdictions signed the Multilateral Competent Authority Agreement, an international framework agreement to enable the automatic exchange of information in accordance with the OECD’s common reporting standard^[9].

Grounded in Article 6 of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, this agreement specifies the details of the information to be exchanged, as well as the timing and modalities of exchanges. Under this framework, financial institutions must report details of financial assets held on behalf of taxpayers resident in other participating jurisdictions to their local tax authority^[10]. That authority then transmits this information to its foreign counterparts within nine months of the end of the relevant calendar year^[11]. Although multilateral in nature, exchanges under the agreement are activated bilaterally following a notification process. This process requires, among other conditions, that each jurisdiction enact the necessary domestic legislation and identify a list of partner jurisdictions with which automatic exchanges, reciprocal or not, are intended^[12].

As of today, 126 jurisdictions, including Canada^[13], have signed this multilateral agreement. The first exchanges took place in 2017 or 2018, depending on the country^[14]. As of March 2024, more than 5400 bilateral automatic exchange relationships had been activated between jurisdictions committed to implementing the common reporting standard^[15]. In the case of Canada, 78 bilateral relations and 22 non-reciprocal automatic exchange relationships have been activated to date under this agreement. The automatic exchange of information with the United States under FATCA has also been effective since January 1, 2015.

Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports

As part of the BEPS project launched with the G20 in 2013 to combat international profit shifting and tax base erosion, the OECD recommended the implementation of Country-by-Country (CbC) Reporting, a standardized form to be completed by multinational enterprises with a consolidated annual revenue of at least EUR 750 million^[16]. Among other things, its implementation was expected to improve the analysis of international profit shifting by providing relevant data to tax administrations^[17].

The CbC report, submitted annually to the tax authority of the ultimates parent entity’s jurisdiction of residences, contains information on total taxes paid, profits, sales, assets and employees by jurisdiction, for each of the subsidiaries of a multinational group. Exchanging these reports allows countries to gain a more comprehensive view of the activities of multinationals operating withing their territory and strengthens efforts to tackle tax base erosion resulting from international profit transfers.

Against that background, the OECD developed the Multilateral Competent Authority Agreement on the Automatic Exchange of Country-by-Country Reports. Closely modelled on the Multilateral Agreement on the Automatic Exchange of Financial Account Information, it is also built on article 6 of the Multilateral Convention on Mutual Assistance. For exchange relationships to become effective between two signatories, each competent authority must complete a notification process, which requires, inter alia, the establishment of the appropriate domestic legislation and a list of jurisdictions with which automatic exchanges, reciprocal or not, are intended^[18].

Canada is among the 113 signatories of this multilateral agreement^[19], and the first exchanges of information between signatories began in June 2018^[20]. As of March 2024, the OECD identified more than 4300 active bilateral automatic exchange links between states that had committed to exchange of CbC reports^[21]. Canada has 81 activated exchange relationships, including 67 bilateral relationships^[22] and 14 non-reciprocal relationships to Canada.

Multilateral Competent Authority Agreement on Automatic Exchange of Information on Income Derived through Digital Platforms

As part of its efforts to address the tax challenges arising from the digitalisation of the economy, the OECD developed the Model Rules for reporting by platform operators with respect to sellers in the sharing and gig economy (MRDP)^[23]. Published in July 2020, these rules are intended to facilitate the reporting of economic activities generated through digital platforms. They require platform operators to collect information on the income earned by entities and individuals providing services through their platform (such as accommodation, transport, delivery or other personal services) and to report that information to tax authorities^[24].

Digital platform operators “are in principle subject to the rules when they are resident, incorporated or managed in the jurisdiction adopting the rules.”^[25] Operators within the scope of the MRDP must collect and verify key information to confirm the identity and tax residence of sellers (including names, address, tax identification number, date of birth or business registration number in the case of an entity) and transmit such information annually to the tax authorities of their jurisdiction of residence^[26]. Where the reported information relates to transactions involving sellers who are resident in other jurisdictions or who own immovable property located abroad, the information is exchanged with the relevant tax administrations^[27].

A natural extension to the publication of the MRDP, the OECD released the Multilateral Competent Authority Agreement on the Automatic Exchange of Information on Income Derived through Digital Platforms in June 2021^[28]. Based on Article 6 of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, this agreement enables the annual automatic exchange of information collected under the MRDP with tax administrations that have completed the notification process described in Section 7, including the list of jurisdictions with which exchanges, whether reciprocal or not, are intended^[29]. Notably, the agreement allows the jurisdiction of residence of a platform operator to transmit information “to an interested receiving jurisdiction, even if the receiving jurisdiction did not itself implement the Model Rules.”^[30] In addition, the multilateral agreement provides for the possibility of exchanging information beyond the initial scope of the MRDP by also covering platforms dedicated to the sale of goods and the rental of means of transportation. To this end, the OECD also published an optional module to the MRDP in June 2021^[31].

Thirty-one jurisdictions have signed this multilateral competent authority agreement since November 2022^[32]. As of August 4, 2025, 16 jurisdictions, including Canada, had activated reciprocal automatic exchange relationships^[33].

Bilateral Tax Treaties

Bilateral tax treaties aim to avoid double taxation and prevent tax evasion with respect to income and capital taxes. ACanada’s treaties are generally based on the OECD’s model tax convention, which dates to 1958^[35]. The OECD’s model convention includes a specific provision for the exchange of information on request between signatories (Article 26). This provision does not obligate tax administrations to gather information that they could not obtain under their domestic legislation, nor to provide information disclosing any trade, industry or professional secret.

Canada’s bilateral tax treaties include Article 26 allowing the exchange of information between tax authorities. Since the initial publication of the OECD’s model convention, Canada has signed bilateral treaties with 96 countries^[36], of which 93 are currently in force^[37]. Approximately half of the treaties were signed between 1995 and 2004.

In practice, a bilateral treaty allows the exchange of information on request between Canada and the other party, provided it is reasonable to expect that such information will be relevant to the application of tax provisions. While primarily intended for income tax purposes, most treaties also permit the exchange of information for other types of taxes beyond those specifically covered by the convention.

The wording of Article 26’s final paragraphs varies across treaties, reflecting refinements in interpretation over time. These differences generally do not affect how the provisions governing the exchange of information operate. In treaties amended or signed in the last two decades, Article 26 is largely uniform, with minor variations. For example, some agreements further restrict the use of exchanged information in public hearings or court proceedings.

Tax Information Exchange Agreements (AERF)

The TIEA is a bilateral treaty primarily designed to provide a mechanism for obtaining tax information upon request. Canada has signed TIEAs with countries with which it does not have bilateral tax treaties, most of which are jurisdictions without a tax system or with low tax regimes. The OECD developed a model bilateral agreement in 2002^[38]. Between 2009 and 2017, Canada signed 25^[39] such agreements with countries considered tax havens, primarily to counter tax evasion; 24 agreements are currently in force to date, covering 26 jurisdictions^[40]. Under the Income Tax Act, as it is the case for bilateral tax treaties, Canadian businesses can repatriate profits from subsidiaries located in signatory states in the form of dividends without additional taxation in Canada.^[41]

While the exchange of information under TIEA generally only applies for income tax purposes, some agreements extend to all taxes (for example, in the case of the TIEA with the Cook Islands). The agreements specify the obligations of the requesting party to provide specific information to support the request, as well as those of the other party, which are to take all measures to respond to the request, unless compliance would cause disproportionate difficulties.