Canco incorporated a wholly-owned subsidiary in Dubai, in the United Arab Emirates (Dubai Co), whose management and control, and the sole establishment of its business will be in Dubai. Art. 4(1)(b)(ii) of the Canada UAE Convention, defined a resident of the UAE to include a company incorporated there where “all or substantially all of the company’s income is derived by the company from the active conduct of a trade or business, other than an investment business, in the United Arab Emirates and all or substantially all of the value of the company’s property is attributable to property used in that trade or business.” CRA stated:
[U]nder paragraph 5907(11.2)(a) … if an FA is resident in a country with which Canada has a treaty but for the purposes of that treaty the FA is not considered to be resident of that country, it will be deemed not to be a resident of the designated treaty country for the purposes of section 5907 … .
… As stated in paragraph 15 of Interpretation Bulletin IT-391R, a company is generally resident in the country in which its central management and control is exercised. Taking into account the comments in the previous paragraph, if it is established on the facts of a specific situation that Dubai Co is a resident of the UAE, it will in addition, for the purposes of applying section 5907 of the Regulations, have to be a resident for the purposes of the CAN-UAE Convention.