Foreign financial institutions that do not meet FATCA requirements may pay a 30% withholding tax on payments from a U.S. source. However, under the intergovernmental agreement, this tax does not apply to Canadian financial institutions that must report information. The North American Free Trade Agreement (NAFTA), signed by Prime Minister Brian Mulroney, Mexican President Carlos Salinas and U.S. President George H.W. Bush, came into force on January 1, 1994. NAFTA has created economic growth and a rising standard of living for the people of the three member countries. By strengthening trade and investment rules and procedures across the continent, Nafta has proven to be a solid foundation for building Canada`s prosperity. NAFTA replaced Canada-U.S. Free Trade Agreement (CUFTA). Negotiations on CUFTA began in 1986 and the agreement entered into force on 1 January 1989. The two nations agreed on a landmark agreement that put Canada and the United States at the forefront of trade liberalization. For more information, visit the Canada-U.S.
Free Trade Agreement information page. The FATCA agreement is an international agreement signed between Canada and the United States that allows the implementation of the Account Compliance Act in Canada. It is one of 30 intergovernmental agreements that the United States has concluded with other countries to implement FATCA.  Fatca expressed a number of concerns in Canada, such as whether Canadian FFYFs could be forced to disclose information directly to the IRS, in compliance with Canadian data protection legislation. The Canada-U.S. igA is trying to allay these concerns by allowing Canadian MFFs to provide the Canadian Revenue Agency (CRA) with information on U.S. accounts that provide this information to U.S. tax authorities as part of the exchange of information under the Canadian Convention on U.S. Revenues. In addition, under the Canada-U.S. IGA, the United States is committed to providing the rating agency with certain information about accounts held by Canadian residents in U.S.
financial institutions. The Canada-U.S. IGA and its annexes are closely in line with the Intergovernmental Model 1 Agreement (IGA) that served as the basis for the IGA that the United States signed with 18 other countries. Like these other GIs, the objective of the Canada-U.S. IGA is to streamline fatca disclosure, reduce FATCA`s compliance burden on financial institutions, and allow COMPLIANCE with FATCA in a manner consistent with existing data protection legislation and other laws. 2 The United States communicates to Canada such more favourable conditions and these more favourable conditions automatically apply in accordance with this agreement, as if those conditions had been established in this agreement and entered into force from the date of the signing of the agreement on more favourable terms, unless Canada objected. In 1994, the United States, Mexico and Canada, with the North American Free Trade Agreement (NAFTA), created the world`s largest free trade region, which generated economic growth and helped improve the living standards of the people of the three member countries. By strengthening trade and investment rules, this agreement has proven to be a solid foundation for building Canada`s prosperity and has provided a valuable example of the benefits of trade liberalization for the rest of the world.