GOVERNMENT RELATIONS: FINANCIAL SERVICES

Case Study 1: Foreign Branching Legislation
Case Study 2: Bank Mergers
Case Study 3: Taxation

TAXATION

challenge

The existing withholding tax on cross-border interest payments between Canada and the United States was having an adverse (cost) impact on cross-border acquisitions by Canadian companies. Furthermore, the Government of the United States was also moving to renegotiate bilateral tax treaties putting at risk the continued availability of the existing favourable tax treaty rate of interest. As a result, a number of Canadian-based multinational companies formed a Coalition to advocate for the elimination of this withholding tax. Department of Finance officials were opposed on the grounds that the elimination of the withholding tax would result in a decrease in revenue for the Federal Government.

strategy

Working closely with the members of the Coalition, we developed and maintained over several years a strategic communications and government relations program designed to convince Government decision-makers that the benefits of eliminating the withholding tax would far outweigh a revenue loss to the Government. As Coalition Secretariat, we undertook research to determine existing attitudes of key Departmental officials and political decision-makers towards eliminating the cross-border withholding tax and developed key messages to respond to the concerns of each audience. We developed and implemented a contact program with key Departmental officials, political decision-makers, influencers and key industry stakeholders. We organized independent third-party experts to research and prepare studies favourable to the coalition's position and helped to create support from a major US business association, who in turn, advocated for the elimination of the tax with the US Treasury Department. We also helped create a positive working environment between the Coalition, Department of Finance officials and officials in the office of successive Ministers of Finance responsible for this matter.

results

Budget 2007 announced the elimination of withholding tax on interest on both arm's length and non-arm's length transactions.