This is an interesting opportunity. Have been lurking here for two weeks trying to find a solution and reading up on every country Canada has a tax treaty with . If I was to add one more country into the mix (Canada) would the 5% pass-through again? So landed $ at the Canadian Parent Co is 5%.
https://www.treaty-accord.gc.ca/text-texte.aspx?lang=eng&id=102410
We have a tax treaty with Estonia but not Georgia. I overlooked Estonia as I was told the 20% CIT is︀ automatic on dividend distribution so in my case it would be 20% +5% WHT to︁ get the $ back to Canada as dividends and using the "exempt surplus" qualification.
As long as income from the foreign affiliate Co owned by the Canada Hold Co is︂ deemed active business income you can bring dividends into Canada from the foreign Co Tax︃ free. Just the WHT and CIT from the foreign company/country needs to be paid.
I like this setup because it would allow me to run an e-commerce business in Georgia︄ but create stability and use the tax treaty with Estonia. Do you think it would︅ be 5%+5% =10 though because of the 5% Double Tax Treaty between Georgia and Estonia︆ and then the 5% WHT Treaty between Estonia and Canada?
My alternative is to just︇ do a Romanian Company and have the 3% Tax up to 500k EUR and then︈ the 5% WHT on dividends between Romania and Canada.
Products will be shipped from China︉ to USA/Canada directly. I'm not ready nor can I leave Canada right now (other business︊ obligations).
So I have been heavily reading on CFC and our Tax Treaties. From what︋ I understand the Dividend and "exempt surplus" with active business income from a foreign affiliate︌ Co owned by the Canada Hold Co is the key.
Really appreciate you taking the︍ time to read all this and offering your valuable knowledge. I've had a few sleepless︎ nights running all this info through ChatGPT and getting into the weeds of deep Canada️ tax info lol.
