For the first time since 2011, Canadian businesses pulled their money out of tax havens, ending a five-year run when more than $120 billion was stashed in the 10 most popular low-tax or no-tax countries.
The newly released Statistics Canada numbers provide the most concrete evidence yet that the Panama Papers may have had a chilling effect on the use of tax havens to minimize corporate taxes.
“This could be a sign that global efforts to curb corporate profit shifting to tax havens may be paying off,” said Dennis Howlett, executive director of Canadians for Tax Fairness, a group that lobbies for the closure of loopholes that encourage the use of offshore tax havens.
According to the government’s official foreign direct investment statistics, Canadian businesses reduced their holdings in the top 10 tax havens from $272.4 billion in 2015 to $261 billion at the end of last year, bringing home $11.4 billion.
This reversal could be due to a number of different factors, including reforms in Ireland that make it harder to exploit that country to avoid taxes, Howlett said. But investment reductions in Luxembourg and Bermuda point to a wider trend. (more...)