Friday, June 17, 2016

Deals Canada signed to catch tax cheats give companies a legal loophole

Montreal-based clothing maker Gildan earned $396 million in profit last year, but paid just over $6 million in cash taxes — a rate of about two per cent.

Drug maker Valeant, based in nearby Laval, Que., booked $1.1 billion in profit in 2014 but paid only $110 million in tax.

It seems like a fiscal fantasy for Canadians used to personal income tax rates of up to 54 per cent. But both companies, and dozens more, did it completely legally, thanks in part to offshore tax havens.

"Usage of tax havens have gone up significantly in the last five years," said Art Cockfield, a tax law expert and professor at Queen's University in Kingston, Ont.

The laws that allow it have only loosened. In the last half-decade, deals the federal government enacted with offshore jurisdictions, ostensibly to allow the Canada Revenue Agency to crack down on tax evasion, have instead permitted tens of billions of dollars to flow into those locales, totally above board.  (more...)


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