Lawyers Financial

Canada's role as global tax haven 'surprising': Rotfleisch

Reports that Canada is considered to be a useful player in international tax evasion is just the latest surprising revelation from the Panama Papers information leak, Canadian tax lawyer David J. Rotfleisch tells

CBC/Radio-Canada reports that a joint investigation with the Toronto Star has uncovered a number of cases where Canadian shell companies were identified by international tax advisers as a good vehicle for hiding the assets and business dealings of clients.

Last year, The International Consortium of Investigative Journalists (ICIJ) made a searchable database available that allows the public to look up names and companies contained in the Panama Papers, detailing more than 214,000 offshore companies, trusts and foundations administered by Panama-based law firm, Mossack Fonseca.

As the article notes, the latest records from the Panama Papers leak show that Mossack Fonseca promoted Canada as a "good place to create tax planning structures to minimize taxes."

Although corporations based in Canada would normally have to pay tax on income, Mossack Fonseca emails allegedly show that shell companies sidestepped this by submitting annual returns and income declarations with false information. CBC says the returns would simply claim that the Canadian company did not have any activities.

CBC reports that there are several factors that make Canada “ripe for the kinds of machinations normally found in offshore tax havens,” including the fact that federally and provincially incorporated companies don't have to register the names of their real owners and operators, but can instead list figurehead directors.

The article also notes that limited partnerships — allowed in some provinces — do not have to pay taxes in Canada if company owners do not live here.

As Rotfleisch, founding tax lawyer at Rotfleisch & Samulovitch Professional Corporation, explains: “Canadian public corporate records only provide for directors, officers and registered office of a corporation, so shareholder information is private and is only reported on a private and confidential basis to the Canada Revenue Agency. 

“However if a shell corporation does have income attributed to it as part of a shuffling of funds then the income would be taxable in Canada and would have to be reported,” Rotfleisch adds.

To Read More David Rotfleisch Posts Click Here
Lawyer Directory
Aids Beat Big BoxToronto Lawyers Association (post to 6.30.19)MKD International (post until Sept. 30/19)Feldstein Family Law (post until May 31/19)Greystones Health Kotak Personal Injury LawyersSRH Litigation (post until May 31/19)Anton Katz (post until June 30/19)