Chapter 16. Tax Discrimination and the Cross-Border Provision of Services

The importance of cross-border trade in services globally is recognized both in the agreement governing the largest international trade group, the World Trade Organization Agreement Agreement), and in trade agreements entered into in smaller trade blocks such as the North American Free Trade Agreement (NAFTA) and the Treaty establishing the European Community (TEC). This chapter compares the interaction of direct taxation and trade in services under the General Agreement on Trade in Services (GATS), in the NAFTA block and the EC to demonstrate the significant distinctions between the obligations assumed by Canada and the UK in their regional trade agreements. The NAFTA tax treaties assume considerable importance both in the taxation of service suppliers in the NAFTA block and in preventing tax discrimination. The chapter focuses on Treaty provisions and cases specifically relating to trade in services, though reference will be made to the right of establishment where necessary. Keywords: cross-border trade; GATS; North American Free Trade Agreement (NAFTA); services; tax discrimination; Treaty establishing the European Community (TEC); World Trade Organization Agreement (WTO Agreement)