The Current

Canada marketed as global tax haven, experts say

When you think of offshore tax havens, add Canada to the list. A joint CBC News and Toronto Star investigation reveals how Canada is becoming a destination for tax evasion.
A three-part CBC/Radio-Canada/Toronto Star investigation looks at how Canada is being used as an international tax haven and what can be done to change it. (CBC)

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Last April, when the Panama Papers were released, investigative journalists from around the world combed through the massive document dump from a Panamanian law firm to see who was hiding what, and where — in tax-avoiding offshore accounts.

Journalists revealed the names of a number of Canadians who were sheltering their money in havens such as the Bahamas and Seychelles.

But more digging has shown something even more surprising — Canada may be turning into quite the tax haven itself.

Both the CBC Investigative Unit and the Toronto Star have been investigating the Panama Papers and found that Canada was being marketed by law firm Mossack Fonseca and others as a destination for tax evasion and avoidance.

Related: 'Tax haven' Canada being used by offshore cheats

Toronto Star investigative reporter Robert Cribb tells The Current's guest host Connie Walker that Canada offers the same kind of secrecy around corporate registration as you'd find in many traditional tax havens.
One of Canada's advantages as a tax haven is the fact it doesn't have a reputation as a tax haven, unlike the Cayman Islands, for example. (David McFadden/Associated Press)

"In other words, it's virtually impossible in many cases to find out who the actual beneficial owner — the guiding controlling hand of a company is — in this country. It's remarkable because it's so easy to hide behind an army of lawyers, or accountants or figurehead fictional directors who are not in fact the director," says Cribb.

"If you want to find secrecy it's very easy to do here. It's the cockroach method — you find darkness and you get in there."

Cribb explains that the structure set up in Canada makes this practice complete legal — there's been very little questioning or public debate to make changes.

"There are companies whose sole purpose is to set up and register companies for their clients in order to reach zero per cent tax goals, and they have discovered Canada — the maple leaf is emblazoned on their websites around the world."

Forensic accountant Peter Dent who works with Transparency International Canada tells Walker he's not surprised that Canada is an attractive tax haven because the system is set up so foreigners can come in and do this.

"You can set up a shell corporation, you can nominate a director and you can conduct transactions and purchase assets with this company," explains Dent.

While it's impossible to know how extensive the problem is since no information is tracked, Dent says there are millions of shell companies in Canada.

He tells Walker the mechanism in place in Canada is so non-transparent, it's impossible to know who you are actually doing business with all the time.

"Are you getting in bed with drug traffickers? Are you, you know, investing with, you know, organized crime?"

"You don't know that because the information you're collecting is whatever they want you to see — and nothing more."

Listen to the full segment at the top of this web post.

This segment was produced by The Current's Sujata Berry and Ashley Mak.