Summary
This is a bilateral tax treaty between Canada and Romania designed to prevent double taxation and fiscal evasion on income and capital. It establishes rules for taxing rights between the two countries, defines key terms like 'resident', 'permanent establishment', and various income types (dividends, interest, royalties, etc.), and sets maximum tax rates on cross-border payments to provide certainty and avoid duplicate taxation.
Reason
This treaty reduces tax barriers to international trade and investment by preventing double taxation, which otherwise would discourage cross-border economic activity, capital flows, and labor mobility. Removing it would create uncertainty and potentially subject Canadian residents with Romanian income (or Romanian residents with Canadian income) to taxation in both jurisdictions, increasing costs and reducing the incentive for mutually beneficial international exchanges. The treaty promotes economic integration and simplifies compliance, aligning with principles of free movement of capital and reducing friction in international commerce.