$500M recouped worldwide from tax cheats due to Panama Papers — but none of it in Canada

Governments around the world say they've recovered a combined $500 million in unpaid taxes thanks to the Panama Papers leak in 2016. But none of that was in Canada, where the CRA says it will be at least 2½ more years before it can announce anything.

CRA says audits 'take time' and it likely won't have anything to report until at least 2020

Countries are using records in the 2016 Panama Papers leak to go after people who hid money offshore and didn't pay tax. Spain says it has recovered $210 million so far, while the amounts in Canada are more modest. (Radio-Canada)

A dozen governments around the world say they've recovered a combined $500 million in unpaid taxes so far thanks to the Panama Papers leak of tax-haven financial records in 2016.

But not a penny of that is destined for Canadian government coffers. The Canada Revenue Agency maintains it will be at least another 2½ years before it will have an idea of how much it might recoup. 

The stark contrast is fuelling criticism of the CRA's effectiveness at catching offshore tax cheats, and comes in the wake of a CBC investigation last month that found few, if any, of the criminal convictions the agency cites in defence of its record actually have anything to do with offshore tax evasion.  

"It's a further indication of the lackadaisical attitude of our revenue agency," said Sen. Percy Downe, a member of the Senate Liberal caucus, who for years has lambasted the CRA's approach to ferreting out offshore tax cheats.

The Panama Papers leak was revealed in April 2016 by a global consortium of media outlets, including the CBC and Toronto Star in Canada, and a month later the CRA obtained all the records through official channels. Then, in early November 2017, the same consortium of journalists revealed the Paradise Papers leak, which included the names of four times more Canadians — though many of those may be linked to perfectly legal, declared accounts. The CRA has not said whether it has gotten its hands on any of that data.

Panama Papers a boon for Spain

The Panama Papers have proved a treasure trove for some countries, with Spain recovering the most unpaid tax so far. Its national revenue agency announced in November a $156-million windfall from taxpayers with hidden funds. Most of that — $128.4 million — came from voluntary disclosures, where the taxpayers came forward themselves following the leak to declare previously unreported income.

The Australian Tax Office said last month it has collected $49 million thus far as a result of the Panama Papers revelations. Australian tax officials snapped to action following the leak, executing 18 search warrants in just a one-week span in September 2016, at one point seizing 170 kilograms of silver bullion and coins.

Revenue Minister Diane Lebouthillier says criminal investigations into offshore tax shenanigans are complex and thus take time. (Justin Tang/Canadian Press)

Even Ecuador, which historically has had problems collecting tax from its citizens, says it has recouped $82.6 million.

The tax-recovery figures were compiled by the International Consortium of Investigative Journalists, the Washington-based organization that co-ordinated global reporting on the Panama Papers. The ICIJ was able to get data from 15 countries, among them Mexico ($27 million in unpaid tax recouped), Lithuania (a modest $377,000) and even the tax haven of Malta ($9.4 million).   

'Files are complex'

The CRA, meanwhile, says it is still auditing 123 taxpayers tied to the Panama Papers, and it is far too soon to talk about how much money could be collected from them.

"These files are complex and will take time to complete," spokesperson Patrick Samson said in an email, explaining that, among other things, the CRA has to wait until taxpayers exhaust any appeals before it can collect from them, which can add years to the timeline.

"The CRA has reported on collections related to offshore projects in the past, some four to seven years after the projects ... started," the agency said. One such example is a 2008 leak of banking records from HSBC in Geneva that ultimately led to more than $60 million collected by the CRA and Revenue Quebec. 

"The CRA will report on the Panama Papers project collections at a similar stage of the project."

That means the agency likely won't provide a number for how much — if any — unpaid tax it might recoup from the Panama Papers until at least spring 2020.

Another factor that is slowing down the tax-recovery process: The CRA isn't allowing anyone identified in the Panama Papers to make a voluntary disclosure, except under what it called "exceptional circumstances," so that they don't get the amnesty from penalties and criminal prosecution normally provided under the program. That means CRA auditors will have to grind through potentially thousands of pages of paperwork to trace hidden money, without the benefit of taxpayers volunteering the information.

'They give people a free pass'

But Sen. Downe said the CRA's inability to point to any money it's recovered so far from the Panama Papers, while more than a dozen other countries can, shows the agency doesn't take offshore tax evasion and avoidance seriously.

"Compare that to domestic tax evasion, where the revenue agency does a very good job if you're trying to hide your money in Canada and not pay taxes. But on overseas tax evasion, they give people a free pass," he said.

Senator Percy Downe has long denounced what he sees as a two-tiered tax enforcement system, where domestic evasion is firmly cracked down on while offshore schemes get 'kid-glove treatment.' (CBC)

"It seems to me the government is at the point now where they should be concerned about the impact this is having on middle class Canadians ... Some of them are ready to get the pitchfork and torches out to bring some semblance of fairness back to our tax system."

The CRA also maintains it has launched "several criminal investigations" based on the Panama Papers involving "both participants and facilitators" in offshore tax schemes, and that it has executed an unspecified number of search warrants, as long ago as summer 2016, as part of its efforts.

CBC News repeatedly pressed for the details of those search warrants, which are public court documents, in order to verify the CRA's claims. But the agency, citing taxpayer privacy, refused to disclose anything about them — how many there are, what courts they're filed in, or what locations were searched.

"There's a level of transparency totally lacking," Downe said. "Government has an opportunity here to really show some strong leadership on fairness for the middle class … But they've buried their heads in the sand."

Read more about the recent Paradise Papers leak:


Zach Dubinsky

Senior Writer, CBC Investigations Unit

Zach Dubinsky is an investigative journalist. His reporting on offshore tax havens (including the Paradise Papers and Panama Papers), political corruption and organized crime has won multiple national and international awards. Phone: 416-205-7553. Twitter: @DubinskyZach Email zach.dubinsky@cbc.ca