A corporation resident in a tax haven jurisdiction
can be used for a variety of purposes that include:
- Manufacturing goods for export;
- Marketing goods for sale in other jurisdictions;
- Licensing patents, trademarks and other intangible property to
other foreign affiliates of Parentco;
- Providing financial services to other foreign affiliates of
Parentco; and
- Carrying on an investment business.
The principle behind undertaking any one of these activities is that
the income generated will be income from an active business and,
therefore, outside the foreign accrual property income rules in the Act.
In order to achieve a level of tax savings from using a tax haven
jurisdiction, it is necessary to locate as many of the relevant
activities as possible in the haven. While in theory this sounds quite
simple, the Canadian income tax rules applicable to such structures are
complex and require careful compliance if an appropriate tax result is
to be achieved.
|
