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Foreign Affairs, Trade and Development Canada

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Payment of Municipal Taxes in Respect to Real Property Used for Commercial Activities

Circular Note No. XDC-1922 of August 29, 2006

The Department of Foreign Affairs and International Trade (Office of Protocol) presents its compliments to Their Excellencies the Heads of Diplomatic Missions and Chargés d'affaires, a.i. accredited to Canada and has the honour to refer to the matter of a foreign state's responsibility to pay municipal taxes in respect to real property from which it derives rental income.

The Department, guided by its Guidelines on Acquisition, Disposition or Development of Real Property, reiterates that the Government of Canada does not grant relief from taxes on properties, or portions thereof, of a foreign state where activities and functions performed thereinto are unofficial in nature and for commercial profit. While the Department does not in principle object if a foreign government pursues Lessor interests in Canada by having commercial tenants, it nonetheless wishes to be informed of all properties, or portions thereof, where such activities taking place so that the tax burden can be apportioned accordingly.

Therefore, in order to administrate the Payment in Lieu of Taxes (PILT) Program in a more equitable way, it would be greatly appreciated if Heads of Diplomatic Missions could, if the case arises, promptly update information regarding the commercial tenants operating on diplomatic or consular premises previously acquired in Canada by their government, specifying the size of the floor space allotted to each tenant.

The Department of Foreign Affairs and International Trade (Office of Protocol) avails itself of this opportunity to renew to Their Excellencies the Heads of Diplomatic Missions and Chargés d'affaires, a.i. accredited to Canada the assurances of its highest consideration.

OTTAWA, August 29, 2006

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Date Modified:
2012-10-10