Canada steps up audits of overseas tax havens

 12 Apr 2016 - 0:00

Canada steps up audits of overseas tax havens
The Canadian flag flies on Parliament Hill in Ottawa. Reuters / Blair Gable


Ottawa: Canada said Monday it is hiring 100 new auditors to investigate large money transfers to overseas tax havens in hopes of recouping Can$2.6 billion (US$2 billion) in unpaid taxes.

The announcement comes in the wake of the leaked "Panama Papers" that exposed how the wealthy stash their money in offshore havens.

National Revenue Minister Diane Lebouthillier told a press conference that the Canada Revenue Agency would begin by targeting 350 Canadians and 400 companies with holdings in the Isle of Man, and expand their work to three other overseas jurisdictions in May.

The agency noted that Can$860 million (US$666 million) had been transferred from Canada to the British crown dependency in a single year.

"Thanks to the measures announced today, there will be no place in the world that will allow Canadians to take part with impunity in tax evasion strategies and tax avoidance strategies," Lebouthillier said.

"Those who hide income and assets overseas or who conduct tax evasion and avoid paying taxes that they owe will be identified and will pay the consequences of their actions."

Last week, the release of 11.5 million leaked documents from the Panama law firm Mossack Fonseca put a worldwide spotlight on tax evasion schemes.

The vast stash of records from Mossack Fonseca was obtained from an anonymous source by German daily Sueddeutsche Zeitung and shared with more than 100 media groups by the International Consortium of Investigative Journalists.

The Toronto Star, which is a part of the consortium, has said 350 Canadians are on the list.

Offshore financial dealings are not illegal, though they may be used to hide assets from tax authorities, launder proceeds of criminal activities or conceal misappropriated or politically inconvenient wealth.

Last month, Ottawa earmarked Can$444.4 million (US$344.5 million) over five years for increased policing of tax evasion.

In addition to its focus on tax havens, the Canadian government said it would take a closer look at "high risk" multinationals and accounting firms that promote questionable tax planning strategies.