Author(s)

Ziyao Wang ¹

Affiliation(s)

¹ Beijing Chenjinglun High School, Beijing, 100020, China

Corresponding Author

Ziyao Wang

ABSTRACT

The China-Canada Bilateral Tax Treaty serves both to avoid double taxation and to prevent tax evasion. When multinational enterprises arrange investments, financing, licensing, and service transactions in both countries, the attribution of profits is influenced by residency status, permanent establishment criteria, related-party transaction conditions, and information exchange procedures. This paper identifies the context of the treaty’s application, the boundaries of residency and business attribution, adjustments to related-party transactions, and pathways for tax cooperation, and analyzes its deterrent effect on contract splitting, expense misallocation, and transfer pricing deviations. The treaty provides attribution criteria, cooperation procedures, and dispute resolution channels, thereby promoting tax arrangements that are grounded in actual business operations and value creation.

KEYWORDS

China-Canada Tax Treaty; Multinational enterprises; Profit shifting; Permanent establishment; Related-party transactions

CITE THIS PAPER

Ziyao Wang. The Deterrent Effect of the China-Canada Bilateral Tax Treaty on Profit Shifting by Multinational Enterprises. Financial Engineering and Risk Management (2026). Vol. 9, No. 1, 124-131. DOI: http://dx.doi.org/10.23977/ferm.2026.090113.

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