Canada Non-Resident Withholding Tax Rates for Treaty Countries

Posted by David Hunkar on 13 December 2015, 9:59 am

Countries have tax treaties with one another for offering preferential tax rates for investors and companies. Canada also has such tax treaties with many countries. For example, US investors get plenty of benefits for investing in Canada. For example, withholding taxes are NOT charged for interest paid out to US residents by Canadian banks and also on dividends paid out by Canadian companies (excluding REITs) to US qualified retirement accounts.

What are the withholding tax rates for countries with which Canada has tax treaties?

The following tables shows the latest tax rates for Non-Residents of Treaty Countries:

Click to enlarge

Canada-Non-Resident-Withholding-Tax-Rates-for-Treaty-Countries

Click on the above image to view the rates for the rest of the countries or download the pdf document below.

Source: KPMG Canada

Download:

Canadian Non-Resident Withholding Tax Rates for Treaty Countries for 2015 (in pdf)

One Structural Flaw in the Brazilian Growth Story

Posted by David Hunkar on 12 December 2015, 11:02 am

The Brazilian economy and equity markets have been on a downward trend for the past few years. The benchmark Bovepa index is down 9.5% year-to-date. Ever since the Global Financial Crisis of 2008-09 Brazilian stocks continue to be poor performers. This is in sharp contrast to views held until a few years ago when the country was the top destination for global investors. However more and more it is becoming clear that the saying “Brazil is country of the future and always will be” is becoming true.

One of the obscured structural flaws in the Brazilian growth story is labor productivity, according to The Boston Consulting Group.Labor productivity simply means how efficient labor is or the output of a worker. For instance, there is a huge difference between a single worker operating a bulldozer to dig a ditch compared to 100 workers using a spoon and bare hands to dig the ditch.

From an article in BCG Perspectives:

How the Boom Obscured Structural Flaws
The boom of the previous decade obscured structural flaws in the Brazilian growth story. In emerging markets such as China, India, and South Korea, rising productivity has been the chief driver of GDP growth. In the case of Brazil, however, productivity grew by a meager 1% a year on average from 2001 through 2013, well below the increase in wages over that period. (See Brazil: Confronting the Productivity Challenge, BCG report, January 2013.) Instead, 78% of the nation’s GDP growth from 2001 through 2013 was attributable to increases in the employed workforce. (See Exhibit 1.) These gains were driven by average annual growth in the working-age population of 1.8% and by falling unemployment, which reached a record low of 4.8% in 2014. But Brazil’s population is aging, and annual growth in the workforce through the rest of the decade is projected to drop to 1.4%.

These factors translate into slower growth in most Brazilian industries. That is a considerable problem for many companies operating in Brazil and their shareholders. Our analysis shows that, on average, revenue growth contributed 12 percentage points of the total shareholder return (TSR) generated by companies on São Paulo’s BM&F Bovespa stock exchange from 2010 through 2014. (For an explanation of TSR, see “The Components of TSR.”)

During the same period, margins deteriorated significantly—offsetting the gains in TSR that derived from revenue growth. This was mainly the result of higher labor costs, excess capacity in several industries, and an overall loss of competitiveness. To finance revenue growth, moreover, companies diluted shareholder value. These were the main reasons for the average negative 4.6% TSR observed from 2010 through 2014. (See Exhibit 2.)

Source: Creating Value in Brazil’s No-Growth Environment, BCG Perspectives

The full article is worth a read.

Brazil still has a long way to go in bring infrastructure to world’s standards. For example, the distance from Sao Paulo International Airport to the downtown is 25-20 Kms. It takes between 1-2 hours by taxi to reach downtown depending on traffic. There is no public transportation like an express train or a regular train to the downtown from the airport. Clearly too much productivity is wasted due to lack of efficient transportation systems.

Related ETF:

iShares MSCI Brazil Capped ETF (EWZ)

Disclosure: No Positions

Knowledge is Power: Top Global Energy Firms, Martial Country, Don’t Panic Edition

Posted by David Hunkar on 11 December 2015, 11:00 pm

Five reasons for investors not to panic about a Fed lift-off (FE Trustnet)
Have Analysts Become Bearish on Chipotle After Health Incidents? (Factset)
Platts 250 – Global Energy Company Rankings for 2015 (Platts)
In a market where everything’s going wrong, this stock is doing everything right (Financial Post)
Stocks are more overvalued now than at 2000 and 2007 peaks (Marketwatch)
How martial a country should the United States be? #guncontrol (Marginal Revolution)

Some earlier articles from TFS:

Water Fountain in Washington, DC

Comparing U.S. Defense Spending To Other Countries

Posted by David Hunkar on 11 December 2015, 3:11 am

The annual US defense expenditures is huge. In fact, the US spending on defense in 2014 was more than the combined spending of the next seven countries according to one report.

Click to enlarge

Source: THE U.S. SPENDS MORE ON DEFENSE THAN THE NEXT SEVEN COUNTRIES COMBINED, Peter G.Peterson Foundation

The following chart shows the portion of defense spending in discretionary spending allocated by Congress in Fiscal year 2015:

Source: Federal Spending: Where Does the Money Go, National Priorities Project

Military was allocated about 54% (or $598 billion) of the $1.1 Trillion budget. As the chart above shows, the less than 50% balance is shared by education, medicare, transportation and other categories.