Canada's treaties - Article 12

The taxation of royalties is determined by Article 12 of the treaty.  In the case of the Canada-Egypt treaty, the first paragraph indicates that royalties arising in one country may be taxed in the other country.  Remember that when you see the wording "may be taxed" it means that they may also be taxed in the originating country.  Paragraph 2 of that treaty reducing the withholding tax to 15%.  That's pretty standard for the treaties but it can be lower (for instance Canada-Australia is 10%).

Looking again at the Canada-Egypt treaty, the third paragraph of the article defines what will be considered to be a royalty.  The definitions tend to be fairly broad and take into account many payment types so you need to review the treaty to see if your payment falls within the scope of this article.  An additional paragraph to exclude certain items (such as business profits) from royalties is usually included to help clarify which payments will be subject to withholding.

Normally, you will also see a paragraph that defines the rules for sourcing.  It is important to determine the source of the royalties to determine whether a reduction in the standard non-resident withholding is available.  Because, don't forget, treaties do not assess tax, they are used to reduce double tax.  If the treaty doesn't apply to royalties, the withholding will be at the high rate for that country (25% for Canada).