A sore point in Canadian-U.S. relations in recent years has been the reluctance of U.S. firms to let Canadian investors buy stock in their profitable Canadian subsidiaries. Largely responsible for the aggravation was a kink in the tax agreements between the two countries. A Canadian subsidiary that was 95% U.S.-owned paid only a 5% tax on the dividends it remitted to the parent company in the U.S. If the proportion of U.S. ownership dropped below 95%, the dividend tax rose to 15%. Rather than have dividend taxes tripled, U.S. companies shied away from selling stock to Canadians.
Last week the...
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