"Analysis of the latest Statistics Canada foreign direct investment figures reveals that Canadian corporations last year increased the amount of assets they report in the top 12 tax havens by 135% in the past decade and up $10 billion from 2018."
Ottawa (28 July 2020) ― Last week Canadians for Tax Fairness released a report showing that Canadian corporations have over $380 billion in tax havens. This is a new high.
The report looked at Canadian corporate assets in the top 12 tax havens, which were $381 billion.
Analysis of the latest Statistics Canada foreign direct investment figures reveals that Canadian corporations last year increased the amount of assets they report in the top 12 tax havens by 135% in the past decade and up $10 billion from 2018.
$380 billion just the tip of the iceberg
“What’s even more disturbing is that these are just the numbers that corporations are reporting—the tip of the iceberg. The extent of offshore corporate tax dodging runs much deeper,” said Toby Sanger, economist and director of Canadians for Tax Fairness.
“Our government does a good job when it comes to talking about cracking down on tax havens, but the numbers tell a different story. Canadian companies are still parking hundreds of billions—more than the size of the federal deficit—in offshore accounts.”
Luxembourg and Bermuda top tax havens for Canadians corporations
Luxembourg was the top tax haven of choice for Canadian corporations with $101 billion, followed by Bermuda ($64 billion), and Barbados ($50 billion). New to the top list was Malta, where ICIJ journalist Daphne Galizia was murdered in 2017 after reporting on the Panama Papers. Canadian corporations parked $4.3 billion in that tax haven—a 52% increase from 2018.
The fact the top tax havens are places where companies are likely to be doing a lot of business - Luxembourg is one of the smallest countries is Europe and Bermuda has only half as many people as PEI – makes it clear the reason corporations have their money there is to dodge taxes.
Tax havens costing Canada billions of dollars each year
Worldwide, governments lose at least US$500 billion in revenues to tax havens each year. Canada loses at least $10 billion, although a 2019 estimate by the Parliamentary Budget Office estimated the amount could be as high as $25 billion.
“Tax havens rob the public of billions in revenues while helping large corporations and the rich to get richer. The result is a widening wealth gap and increasing corporate concentration, which hurts the economy and all Canadians,” Sanger said.
Canada has the ability to crack down on tax havens – what’s needed is the will
The study recommends several policy reforms such as ending double non-taxation agreements with tax havens, requiring large corporations to publicly report taxes paid in each country, and treating multi-national enterprises as single entities for tax purposes so they can’t avoid taxes through subsidiaries.
“Large Canadian corporations have profited immensely from taxes that pay for an educated workforce, infrastructure to carry goods to market, and investments to grow their businesses. As Canada combats one of the greatest health and economic challenges of the century, it’s time that these large corporations pay their fair share of taxes too,” Sanger said.