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2014-03-15 17:17:29 UTC
http://www.cbc.ca/news/corporate-tax-avoidance-scheme-hurting-canada-
expert-says-1.2572712
Corporate tax avoidance 'scheme' hurting Canada, expert says.
Country's corporate tax rate sits at about 25 per cent.
By Talin Vartanian, Mar 15, 2014
Dennis Howlett, executive director of Canadians for Tax Fairness, says
multinational corporations set up subsidiaries in tax havens such as
the Cayman Islands and devise ways to transfer profits there from
Canada.
As Canadians dutifully file personal income tax returns during the
coming weeks, consider this: many profitable companies pay little or no
tax.
In an interview this week on The Sunday Edition, Dennis Howlett,
executive director of Canadians for Tax Fairness, says these
multinational corporations set up subsidiaries in tax havens such as
Ireland, Switzerland and the Cayman Islands and devise ways to transfer
profits there from Canada. There are no laws to prevent this.
Theres been a proliferation of tax havens, Howlett explains to host
Michael Enright. Now, a quarter of all direct Canadian foreign
investment going abroad is going to tax haven countries. Thats about
$170 billion sitting in tax havens, so its become a huge problem.
Tax havens explained: How the rich hide money
How Canadas banks help move money in and out of tax havens
An additional concern for Howletts organization is Canadas low
corporate tax rate, which the Conservative government established with
no guarantee or requirement from corporations that they spend it on job
creation or other benefits to the country.
Currently, the rate is about 25 or 26 per cent, depending on the
province. Its so low that Howlett has actually heard complaints from
the U.S.
I was in Washington a year or so ago when I met with some of the
congressional staff there, who were complaining about Canada becoming a
tax haven, he says, because our corporate tax rates are now 10 points
below the U.S.
Culture of 'secrecy'
He reveals that according to Bloomberg LP, few multinationals even pay
that low rate. Of the TSX 60 the top 60 companies trading on the
Toronto Stock Exchange only four paid 25 per cent tax or more between
2007 and 2011.
Thirteen per cent of these corporations paid less than 5 per cent in
taxes and more than half paid less than 10 per cent. Much of this tax
evasion is done secretly.
Tax Season Special Report: tips and tools
Corporate tax evasion 'crackdown' more bark than bite
Tax agency targeting middle-income tax cheats
The secrecy allows people to open shell companies or trust accounts
where they dont have to identify who the ultimate beneficial owner
is, Howlett explains. So an account can be opened up in the name of a
local lawyer or some other person who acts as an intermediary. That way
they can hide the fact that theyve got money sitting in an account and
its very hard for the Canadian Revenue Agency to figure out whos got
money hiding in Barbados or Cayman Islands or wherever it is.
He adds that severe cuts at Revenue Canada more than 3,000 public
servants, more than any other government department have hampered the
governments ability to investigate cases of corporate tax avoidance:
The problem is unless there is some credible threat of being caught,
more and more people get into this tax-haven, tax-avoidance scheme.
10 myths about taxes that mislead Canadians
He says the situation has become so serious that some corporations are
trying to put the brakes on tax cuts, as they witness the effects on
critical areas of the Canadian economy, such as education, health care
and infrastructure.
Global efforts are underway for reform. The G8 and G20 summits asked
the Organisation for Economic Co-operation and Development (OECD) to
devise a new international corporate tax system.
Ultimately, I think we need a unitary taxation system where
multinational corporations have to report their global profits, and the
profits should be taxed where the economic activities occur and the
value is created, Howlett says. If the corporations arent paying
their fair share, ordinary taxpayers are shouldering more of the tax
responsibility.
http://www.cbc.ca/news/corporate-tax-avoidance-scheme-hurting-canada-
expert-says-1.2572712
expert-says-1.2572712
Corporate tax avoidance 'scheme' hurting Canada, expert says.
Country's corporate tax rate sits at about 25 per cent.
By Talin Vartanian, Mar 15, 2014
Dennis Howlett, executive director of Canadians for Tax Fairness, says
multinational corporations set up subsidiaries in tax havens such as
the Cayman Islands and devise ways to transfer profits there from
Canada.
As Canadians dutifully file personal income tax returns during the
coming weeks, consider this: many profitable companies pay little or no
tax.
In an interview this week on The Sunday Edition, Dennis Howlett,
executive director of Canadians for Tax Fairness, says these
multinational corporations set up subsidiaries in tax havens such as
Ireland, Switzerland and the Cayman Islands and devise ways to transfer
profits there from Canada. There are no laws to prevent this.
Theres been a proliferation of tax havens, Howlett explains to host
Michael Enright. Now, a quarter of all direct Canadian foreign
investment going abroad is going to tax haven countries. Thats about
$170 billion sitting in tax havens, so its become a huge problem.
Tax havens explained: How the rich hide money
How Canadas banks help move money in and out of tax havens
An additional concern for Howletts organization is Canadas low
corporate tax rate, which the Conservative government established with
no guarantee or requirement from corporations that they spend it on job
creation or other benefits to the country.
Currently, the rate is about 25 or 26 per cent, depending on the
province. Its so low that Howlett has actually heard complaints from
the U.S.
I was in Washington a year or so ago when I met with some of the
congressional staff there, who were complaining about Canada becoming a
tax haven, he says, because our corporate tax rates are now 10 points
below the U.S.
Culture of 'secrecy'
He reveals that according to Bloomberg LP, few multinationals even pay
that low rate. Of the TSX 60 the top 60 companies trading on the
Toronto Stock Exchange only four paid 25 per cent tax or more between
2007 and 2011.
Thirteen per cent of these corporations paid less than 5 per cent in
taxes and more than half paid less than 10 per cent. Much of this tax
evasion is done secretly.
Tax Season Special Report: tips and tools
Corporate tax evasion 'crackdown' more bark than bite
Tax agency targeting middle-income tax cheats
The secrecy allows people to open shell companies or trust accounts
where they dont have to identify who the ultimate beneficial owner
is, Howlett explains. So an account can be opened up in the name of a
local lawyer or some other person who acts as an intermediary. That way
they can hide the fact that theyve got money sitting in an account and
its very hard for the Canadian Revenue Agency to figure out whos got
money hiding in Barbados or Cayman Islands or wherever it is.
He adds that severe cuts at Revenue Canada more than 3,000 public
servants, more than any other government department have hampered the
governments ability to investigate cases of corporate tax avoidance:
The problem is unless there is some credible threat of being caught,
more and more people get into this tax-haven, tax-avoidance scheme.
10 myths about taxes that mislead Canadians
He says the situation has become so serious that some corporations are
trying to put the brakes on tax cuts, as they witness the effects on
critical areas of the Canadian economy, such as education, health care
and infrastructure.
Global efforts are underway for reform. The G8 and G20 summits asked
the Organisation for Economic Co-operation and Development (OECD) to
devise a new international corporate tax system.
Ultimately, I think we need a unitary taxation system where
multinational corporations have to report their global profits, and the
profits should be taxed where the economic activities occur and the
value is created, Howlett says. If the corporations arent paying
their fair share, ordinary taxpayers are shouldering more of the tax
responsibility.
http://www.cbc.ca/news/corporate-tax-avoidance-scheme-hurting-canada-
expert-says-1.2572712