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Unformatted text preview: its if it satisfies both an ownership test and a base-erosion test. The ownership test is satisfied if 50 percent or more of the entity’s aggregate voting power and value, among other things, is not owned, directly or indirectly, by persons other than qualifying persons. Furthermore, each company in the chain of ownership must be a qualifying person. The technical explanation provides some guidance about how Canada and the united states have agreed to apply the ownership test in article xxix a(2)(e). However, some inconsistencies remain regarding whether the tests are applied to all entities in the chain of ownership. The technical explanation states that the ownership test is not satisfied if, for example, a Canadian company is more than 50 percent owned by a us-resident company that is itself wholly owned by a third-country resident. in this case, the Canadian company does not meet the ownership test because more than 50 percent of its shares are indirectly owned by a person (the third-country resident) that is not a qualifying person. This example demonstrates that the indirect ownership test should be applied to each entity in the chain of ownership up to...
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This note was uploaded on 11/03/2013 for the course ACCOUNTING 346 taught by Professor William during the Fall '12 term at DeVry Chicago.

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