Photo: Oli Scarff Agence France-Presse
The island of Jersey, dependency on the british, is among tax havens “inside” of choice identified in the report of Canadians for tax fairness.
Canada continues to increase its presence in tax havens.
Canadian companies reported by 2019, to 381 billion of financial assets in 12 tax havens, an increase of nearly 3 % compared to the previous year, reported Wednesday the group Canadians for tax fairness (CFE). These 12 economies, often tiny, have now for more than a quarter (27.4 per cent) of the 1391 billion invested abroad by canadian companies, compared to only 11 per cent 30 years ago.
The report is based on the assessment of foreign direct investment (FDI) last year, recently compiled by Statistics Canada, where we could see, just behind the United States (with 632 billion of FDI) and the Uk ($107 billion), come from countries renowned for their fiscal rules more accommodating for the business that we can really do there, such as Luxembourg (101 billion), Bermuda ($64 billion), Barbados ($50 billion) or even the Cayman islands ($43 billion). In fact, 6 of the top 10 destinations of FDI from canadian companies are generally regarded as tax havens.
Mainly of multinational companies, which simply pass billions of dollars in shells legal to artificially reduce their tax burden, this little game translates into business activities almost symbolic in proportion to the amounts invested. The so-called “investment ghosts” give, and, for canadian companies, 31 local jobs per billion invested in Luxembourg, a 5.5-jobs in the Cayman islands and 1.7 employment in Bermuda.
“Most disturbing is that this is only the figures officially reported by the undertakings, that is to say, the tip of the iceberg “, said the director of CFE, and Toby Sanger. Not only companies, do not say without a doubt, not everything, but country data do not allow us to see what part, for example, investment in the United States and the United Kingdom take the path of their own tax havens interiors, such as the american States of Delaware and South Dakota, or the british dependencies of Jersey, Guernsey and the isle of Man.
In an earlier study, MCE was reported in 2017 that more than 90% of the 60 largest companies listed on the Toronto stock Exchange had each with at least one subsidiary in a tax haven. The NGO is not a private, on Wednesday, to cite a few of the canadian multinationals involved in the new report, including Husky Energy and Cargill in Luxembourg, and Irving, and Canada Steamship Lines Bermuda or even Loblaw and Capital Sports, owner of the hockey team, the Ottawa Senators, in Barbados.
36 000 billion
These practices do not give not only an unfair advantage of the multinational over their competitors smaller sizes, they are also depriving the Treasury of revenue, ” says the report. A year ago, the parliamentary budget officer in Ottawa estimated the shortfall for governments in Canada between 10 and 25 billion annually. In the context of the crisis caused by the pandemic COVID-19, voices were raised to claim that the emergency financial assistance of governments should be refused to companies who use tax havens, but without success.
An analysis of the international monetary Fund (IMF) reported in September that the total of all “investments of ghosts” was $ 15 000 (US $billion) worldwide in 2017, representing 40 % of all FDI. These maneuvers would deprive the public authorities of 500 to 600 billion of revenue a year, said another analysis of the IMF. If one adds to the portrait all of the rich individuals, corrupt leaders and criminals who seek, also, to put it in a tax shelter, it is up to 36 000 billion dollars that would be kept in the shade in tax havens, added-on.
Some progress has been observed recently after years of efforts, under the auspices of the Organization of economic cooperation and development (OECD), admits EFC. There is in place a system of automatic exchange of information on individuals who hold accounts abroad. One also begins to require multinationals to disclose where they actually produce their goods, offer their services, hire employees, make their profit and pay their taxes.
Unfortunately, Canada is far from being a model of transparency in this chapter, laments the report. But “the biggest problem is that the bulk of the tax avoidance and the use of tax havens by companies is perfectly legal [because] our tax rules are basically outdated’. It calls, among other things, a tax which would apply where companies record their revenues and profits, the introduction of an international tax minimum on the companies and to the application of a tax on the giants of the digital world.
The biggest problem is that the bulk of the tax avoidance and the use of tax havens by companies is perfectly legal [because] our tax rules are basically outdated
— Canadians for tax fairness
It will also give more means of investigation and control to the police authorities, and tax, it is said. “Greater transparency and tougher rules will only give results if they come with the necessary muscles to make them comply. “