9 ms·

Canada is the world’s newest tax haven (2017)

195 points by ericdanielski 7y ago

mikece 7y ago
"Another key reason is that Canada’s corporate registration systems — federally and provincially — are shrouded in the same kind of secrecy that exists in tax havens such as the British Virgin Islands, Panama and the Bahamas. Company owners who don’t wish to be identified in Canadian corporate registries can pay a lawyer or a stand-in to appear on all public filings." Would I be correct in presuming that in the two years since this story came out the Canadian Parliament closed at least this loophole -- and perhaps several others?
- momirlan 7y ago
  Uhhh....no
  - dang 7y ago
    Would you please not post unsubstantive comments here? Especially not snarky ones ("Uhhh....").
- hogFeast 7y ago
  It isn't a "loophole". This structure, by itself, helps you avoid no tax at all. The issue is a combination of: concealing ownership, concealing identity, and (a big one) home countries not acting on information. But yes: Canada, and the other places where this was happening like Scotland and the Caymans, have started reporting beneficial ownership. This will preserve the reputation of the places involved but, of course, it doesn't tackle the underlying issues.
- alricb 7y ago
  There was a law adopted in 2018, and related regulations in 2019: https://www.blakesbusinessclass.com/revamping-canadas-anti-money-laundering-rules-whats-new-whats-changed-means-business/ https://www.blakesbusinessclass.com/revamping-canadas-anti-m...
- munk-a 7y ago
  I don't know why the assumption is that this hurt's Canada's ability to properly assess and tax - it's like a private whois registration, there is a registrar or stand in that can (and usually trivially accedes) to governmental requests as to original identity, it's just harder for individuals to track down. The government knows who owns what[1]. 1. At least in Canada, there are all sorts of fair accounting laws that require people handling assets to report it to the government in addition to the actual parties who own the assets to do that reporting. If your company is shifting money around in various Canadian bank accounts to launder domestically... the government knows... if you're only using international accounts then why are you even registered in Canada.
imposterr 7y ago
_Looks at 43% marginal tax rate_ Well this is news to me. Jokes aside, I've heard about Canada being used to launder money, but this is the first I'm hearing about it being used as a tax haven.
- rayiner 7y ago
  42.75% maximum marginal rate here in Maryland.
  - deleted 7y ago
    [deleted]
  - refurb 7y ago
    Now layer on a 15%+ Harmonized Sales Tax on top of that and you’ve got Canada.
    - cmrdporcupine 7y ago
      What provinces have 15% HST? It's 13% in Ontario...
      - refurb 7y ago
        New Brunswick, Nova Scotia, Newfoundland, Quebec (well, 14.975%).
    - DKnoll 7y ago
      Total sales tax ranges 5-15% across all provinces, it never exceeds 15% (unless you include taxes on specific goods, like alcohol).
- cmrdporcupine 7y ago
  The awful thing about Canada is that the personal income tax rate is relatively steep, but corporate taxes are among the lowest in the G7. And there's a whole army of 'small businesses' and 'investors' and 'consultants' lobbying to ensure this remains the case, despite much of their work being wage labour in reality. Driving around in 'company' cars, and owning 'corporate' assets, sponging...
99_00 7y ago
All the cash flooding in has impacted a lot of people by driving up the cost of living, especially in Vancouver. Report finds $5B laundered through B.C. real estate in 2018 https://globalnews.ca/news/5259196/home-prices-in-metro-vancouver-increased-by-5-due-to-money-laundering-report/ https://globalnews.ca/news/5259196/home-prices-in-metro-vanc... Secret police study finds crime networks could have laundered over $1B through Vancouver homes in 2016 https://globalnews.ca/news/4658157/fentanyl-vancouver-real-estate-billion-money-laundering-police-study/ https://globalnews.ca/news/4658157/fentanyl-vancouver-real-e... CRA (Canada's IRS) to cut managers, fold tax-evasion units, memo shows https://www.theglobeandmail.com/news/politics/cra-to-cut-managers-fold-tax-evasion-units-memo-shows/article20704948/ https://www.theglobeandmail.com/news/politics/cra-to-cut-man... Entire cities appear poor on paper because of wide spread tax evasion. Why does upscale neighbourhood appear 'poor' to tax officials? https://vancouversun.com/life/richmond-3-why-does-upscale-neighbourhood-appear-poor-to-tax-officials https://vancouversun.com/life/richmond-3-why-does-upscale-ne... Richmond is majority Chinese. >nine of 10 recent Chinese immigrants arrive in Metro Vancouver with enough money to immediately buy homes. But only half hold down jobs during their first five years in Canada, while four of 10 report they’re surviving on low incomes. https://vancouversun.com/opinion/columnists/douglas-todd-how-chinese-filipino-and-other-immigrants-differ https://vancouversun.com/opinion/columnists/douglas-todd-how...
- asdf21 7y ago
  But heaven forbid you question the wisdom of these sorts of immigration policies, because if you do you must be a evil bad mean racist. Edit, sure, downvote away. Even if the government prosecuted everyone who did this 100% fairly, the police and government would endlessly be called racist for targeting minorities. It's absurd.
  - scarejunba 7y ago
    The following are all simultaneously true: * There are racists who want to curb immigration * There are immigrants exploiting real-estate laws to launder money * There are non-racists who want to curb immigration * There are immigrants who move to Canada and contribute to society there
bawolff 7y ago
>“I believe the Canada companies … are managed in a way that the administrators simply declare annually NO-ACTIVITY. In other words, they cheat a bit,” So the trick to using canada as a tax haven, is to lie on your taxes? I feel like that approach also works in other countries
kyteland 7y ago
I read an article this morning that South Dakota has become a tax haven as well due to their trust laws. An interesting read. https://www.theguardian.com/world/2019/nov/14/the-great-american-tax-haven-why-the-super-rich-love-south-dakota-trust-laws https://www.theguardian.com/world/2019/nov/14/the-great-amer...
- jdhn 7y ago
  I honestly don't know if I can take this article seriously when it implies that South Dakota repealing usury laws is singlehandedly responsible for all of the credit card debt in the US.
  - corford 7y ago
    I wouldn't blame you if that's what the article actually said... (it didn't)
    - vonmoltke 7y ago
      That's not the implication you get from this statement? > Thanks to Janklow, South Dakota has a financial services industry, and the US has a trillion-dollar credit card debt.
    - jdhn 7y ago
      Please read my comment again. I said it implies it, not outright says it. From the 14th paragraph: "Thanks to Janklow, South Dakota has a financial services industry, and the US has a trillion-dollar credit card debt." This is definitely the author trying to peg America's credit card debt onto Janklow, and therefore South Dakota.
      - BubRoss 7y ago
        That doesn't seem like what it implies at all. It is saying the US uses credit cards and South Dakota can now participate (if it is saying anything at all).
- 7y ago
m463 7y ago
I thought it was puerto rico https://www.gq.com/story/how-puerto-rico-became-tax-haven-for-super-rich https://www.gq.com/story/how-puerto-rico-became-tax-haven-fo...
Havoc 7y ago
>declare annually NO-ACTIVITY. In other words, they cheat a bit, That's just straight up tax fraud. You don't need Canada for that. If you're willing to make fraudulent declarations to tax authorities you don't really need all these complicated things.
- purple_ducks 7y ago
  from the article: > “Things you’d do 20 years for in the U.S., you might get a fine in Canada and that’s not lost on criminals,” Mathers told the Star.
  - paggle 7y ago
    The more I hear about other countries' supposedly "enlightened" criminal justice systems the more I prefer the US system. Like this guy who should have gotten the electric chair and got 2 years in a Swiss hotel: https://en.wikipedia.org/wiki/Vitaly_Kaloyev https://en.wikipedia.org/wiki/Vitaly_Kaloyev
    - soperj 7y ago
      >The more I hear about other countries' supposedly "enlightened" criminal justice systems the more I prefer the US system The "US System" from the outside is incarcerate everyone except those who can afford to not be incarcerated.
    - Ididntdothis 7y ago
      You shouldn’t prefer the US system because of cases like this. First mass incarceration has destroyed whole communities and costs the country enormous amounts. And the US also has plenty of cases with people getting away with bad stuff. Just look at Epstein. This guy should have been locked away probably decades ago but somehow his powerful friends (bipartisan) kept him safe.
    - dmix 7y ago
      > On 8 November 2007, Kaloyev was released from prison, because his mental condition was not sufficiently considered in the initial sentence.[12] He got off because of a process technicality on his sentencing (aka due process) not because of a lax criminal justice system. 8yrs for "a charge that falls between murder and manslaughter in Switzerland" would be pretty standard in most countries. The mental state and motives always plays a large role in determining someone's level of guilt. As it should. Plenty of people get off because the prosecutors and judges are either overzealous or not following protocol, which ultimately leads to the opposite happening (legitimate criminals getting off easy).
miohtama 7y ago
Meanwhile Amazon pays $0 tax on $11B profit https://finance.yahoo.com/news/amazon-taxes-zero-180337770.html?soc_src=social-sh&soc_trk=tw https://finance.yahoo.com/news/amazon-taxes-zero-180337770.h...
- briandear 7y ago
  Very misleading. The actual answer isn’t easily fit into a campaign sound byte, but here is a better analysis: https://www.wsj.com/articles/does-amazon-really-pay-no-taxes-heres-the-complicated-answer-11560504602 https://www.wsj.com/articles/does-amazon-really-pay-no-taxes... Let’s also not forget that 44% of Americans didn’t pay federal income taxes.
  - shard972 7y ago
    44% of Americans live in relative poverty to the owner of amazon.
ckastner 7y ago
I would challenge the title's assertion somewhat; at least, when Canadian banks are involved (as one would assume even with shell companies). Canada participates in the Automatic Exchange of Information (AEOI) [1]. That means that even though some of these companies might not be required to file tax reports, the banks where they hold their accounts most certainly have to report the account holder and, where applicable, all beneficial owners [2]. Simply put, if I, personally, held money at a Canadian bank either directly, or indirectly via a shell company, I might not have many reporting requirements with the Canadian government directly, but the bank would have reporting requirements, which would ultimately lead to the bank's reports landing on the desk of my home country's tax authority [3]. The only way around this is the bank not keeping their AML/KYC records as straight as they should, but supervisory authorities usually come down hard on those cases. [1] https://en.wikipedia.org/wiki/Common_Reporting_Standard https://en.wikipedia.org/wiki/Common_Reporting_Standard [2] https://en.wikipedia.org/wiki/Beneficial_owner https://en.wikipedia.org/wiki/Beneficial_owner [3] Provided both countries actually exchange information, which is the case for dozens of countries as of now. That includes Canada, Switzerland, and many other countries one might consider a "tax haven". It doesn't include the USA, however. Many would say that the USA are the last real tax haven.
- RandyRanderson 7y ago
  You're assuming that anyone with the authority to stop this , wants to. IF someone wanted to stop this, I'm sure they'd be able to get the info.
ttul 7y ago
I have incorporated many companies in Canada and have always marveled at the lack of vetting. You’d think they would want to see some identification on the incorporation docs. But no. You just fill in a web form and pay $20 or whatever.
- ticmasta 7y ago
  You have most certainly never incorporated a Canadian corporation online for $20. That's the fee for filing an annual return for a federally incorporated company; the vast majority of companies are registered provincially.
  - ttul 7y ago
    Apologies. I missed a zero. https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs06939.html https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs06939.html You can incorporate federally and leave it at that. Extra-provincial registration is required if you carry on business within a specific province.
    - abledon 7y ago
      could you do a youtube tutorial series? I'd love to see the easy process documented.
  - Scoundreller 7y ago
    Fed incorporations are $200+ Provincial/territorial corps are all around $300+, but don't have the $20/year filing fee.
deleted 7y ago
[deleted]
msie 7y ago
No wait, now it's the US: https://www.theguardian.com/world/2019/nov/14/the-great-american-tax-haven-why-the-super-rich-love-south-dakota-trust-laws https://www.theguardian.com/world/2019/nov/14/the-great-amer...
deleted 7y ago
[deleted]
AzzieElbab 7y ago
This is so ironic considering how much taxes Canadians pay themselves

195 points by ericdanielski 7y ago

"Another key reason is that Canada’s corporate registration systems — federally and provincially — are shrouded in the same kind of secrecy that exists in tax havens such as the British Virgin Islands, Panama and the Bahamas. Company owners who don’t wish to be identified in Canadian corporate registries can pay a lawyer or a stand-in to appear on all public filings." Would I be correct in presuming that in the two years since this story came out the Canadian Parliament closed at least this loophole -- and perhaps several others?

momirlan 7y ago
Uhhh....no
- dang 7y ago
  Would you please not post unsubstantive comments here? Especially not snarky ones ("Uhhh....").
hogFeast 7y ago
It isn't a "loophole". This structure, by itself, helps you avoid no tax at all. The issue is a combination of: concealing ownership, concealing identity, and (a big one) home countries not acting on information. But yes: Canada, and the other places where this was happening like Scotland and the Caymans, have started reporting beneficial ownership. This will preserve the reputation of the places involved but, of course, it doesn't tackle the underlying issues.
alricb 7y ago
There was a law adopted in 2018, and related regulations in 2019: https://www.blakesbusinessclass.com/revamping-canadas-anti-money-laundering-rules-whats-new-whats-changed-means-business/ https://www.blakesbusinessclass.com/revamping-canadas-anti-m...
munk-a 7y ago
I don't know why the assumption is that this hurt's Canada's ability to properly assess and tax - it's like a private whois registration, there is a registrar or stand in that can (and usually trivially accedes) to governmental requests as to original identity, it's just harder for individuals to track down. The government knows who owns what[1]. 1. At least in Canada, there are all sorts of fair accounting laws that require people handling assets to report it to the government in addition to the actual parties who own the assets to do that reporting. If your company is shifting money around in various Canadian bank accounts to launder domestically... the government knows... if you're only using international accounts then why are you even registered in Canada.

imposterr 7y ago

_Looks at 43% marginal tax rate_ Well this is news to me. Jokes aside, I've heard about Canada being used to launder money, but this is the first I'm hearing about it being used as a tax haven.

rayiner 7y ago
42.75% maximum marginal rate here in Maryland.
- deleted 7y ago
  [deleted]
- refurb 7y ago
  Now layer on a 15%+ Harmonized Sales Tax on top of that and you’ve got Canada.
  - cmrdporcupine 7y ago
    What provinces have 15% HST? It's 13% in Ontario...
    - refurb 7y ago
      New Brunswick, Nova Scotia, Newfoundland, Quebec (well, 14.975%).
  - DKnoll 7y ago
    Total sales tax ranges 5-15% across all provinces, it never exceeds 15% (unless you include taxes on specific goods, like alcohol).
cmrdporcupine 7y ago
The awful thing about Canada is that the personal income tax rate is relatively steep, but corporate taxes are among the lowest in the G7. And there's a whole army of 'small businesses' and 'investors' and 'consultants' lobbying to ensure this remains the case, despite much of their work being wage labour in reality. Driving around in 'company' cars, and owning 'corporate' assets, sponging...

99_00 7y ago

All the cash flooding in has impacted a lot of people by driving up the cost of living, especially in Vancouver. Report finds $5B laundered through B.C. real estate in 2018 https://globalnews.ca/news/5259196/home-prices-in-metro-vancouver-increased-by-5-due-to-money-laundering-report/ https://globalnews.ca/news/5259196/home-prices-in-metro-vanc... Secret police study finds crime networks could have laundered over $1B through Vancouver homes in 2016 https://globalnews.ca/news/4658157/fentanyl-vancouver-real-estate-billion-money-laundering-police-study/ https://globalnews.ca/news/4658157/fentanyl-vancouver-real-e... CRA (Canada's IRS) to cut managers, fold tax-evasion units, memo shows https://www.theglobeandmail.com/news/politics/cra-to-cut-managers-fold-tax-evasion-units-memo-shows/article20704948/ https://www.theglobeandmail.com/news/politics/cra-to-cut-man... Entire cities appear poor on paper because of wide spread tax evasion. Why does upscale neighbourhood appear 'poor' to tax officials? https://vancouversun.com/life/richmond-3-why-does-upscale-neighbourhood-appear-poor-to-tax-officials https://vancouversun.com/life/richmond-3-why-does-upscale-ne... Richmond is majority Chinese. >nine of 10 recent Chinese immigrants arrive in Metro Vancouver with enough money to immediately buy homes. But only half hold down jobs during their first five years in Canada, while four of 10 report they’re surviving on low incomes. https://vancouversun.com/opinion/columnists/douglas-todd-how-chinese-filipino-and-other-immigrants-differ https://vancouversun.com/opinion/columnists/douglas-todd-how...

asdf21 7y ago
But heaven forbid you question the wisdom of these sorts of immigration policies, because if you do you must be a evil bad mean racist. Edit, sure, downvote away. Even if the government prosecuted everyone who did this 100% fairly, the police and government would endlessly be called racist for targeting minorities. It's absurd.
- scarejunba 7y ago
  The following are all simultaneously true: * There are racists who want to curb immigration * There are immigrants exploiting real-estate laws to launder money * There are non-racists who want to curb immigration * There are immigrants who move to Canada and contribute to society there

bawolff 7y ago

>“I believe the Canada companies … are managed in a way that the administrators simply declare annually NO-ACTIVITY. In other words, they cheat a bit,” So the trick to using canada as a tax haven, is to lie on your taxes? I feel like that approach also works in other countries

kyteland 7y ago

I read an article this morning that South Dakota has become a tax haven as well due to their trust laws. An interesting read. https://www.theguardian.com/world/2019/nov/14/the-great-american-tax-haven-why-the-super-rich-love-south-dakota-trust-laws https://www.theguardian.com/world/2019/nov/14/the-great-amer...

jdhn 7y ago
I honestly don't know if I can take this article seriously when it implies that South Dakota repealing usury laws is singlehandedly responsible for all of the credit card debt in the US.
- corford 7y ago
  I wouldn't blame you if that's what the article actually said... (it didn't)
  - vonmoltke 7y ago
    That's not the implication you get from this statement? > Thanks to Janklow, South Dakota has a financial services industry, and the US has a trillion-dollar credit card debt.
  - jdhn 7y ago
    Please read my comment again. I said it implies it, not outright says it. From the 14th paragraph: "Thanks to Janklow, South Dakota has a financial services industry, and the US has a trillion-dollar credit card debt." This is definitely the author trying to peg America's credit card debt onto Janklow, and therefore South Dakota.
    - BubRoss 7y ago
      That doesn't seem like what it implies at all. It is saying the US uses credit cards and South Dakota can now participate (if it is saying anything at all).
7y ago

m463 7y ago

I thought it was puerto rico https://www.gq.com/story/how-puerto-rico-became-tax-haven-for-super-rich https://www.gq.com/story/how-puerto-rico-became-tax-haven-fo...

Havoc 7y ago

>declare annually NO-ACTIVITY. In other words, they cheat a bit, That's just straight up tax fraud. You don't need Canada for that. If you're willing to make fraudulent declarations to tax authorities you don't really need all these complicated things.

purple_ducks 7y ago
from the article: > “Things you’d do 20 years for in the U.S., you might get a fine in Canada and that’s not lost on criminals,” Mathers told the Star.
- paggle 7y ago
  The more I hear about other countries' supposedly "enlightened" criminal justice systems the more I prefer the US system. Like this guy who should have gotten the electric chair and got 2 years in a Swiss hotel: https://en.wikipedia.org/wiki/Vitaly_Kaloyev https://en.wikipedia.org/wiki/Vitaly_Kaloyev
  - soperj 7y ago
    >The more I hear about other countries' supposedly "enlightened" criminal justice systems the more I prefer the US system The "US System" from the outside is incarcerate everyone except those who can afford to not be incarcerated.
  - Ididntdothis 7y ago
    You shouldn’t prefer the US system because of cases like this. First mass incarceration has destroyed whole communities and costs the country enormous amounts. And the US also has plenty of cases with people getting away with bad stuff. Just look at Epstein. This guy should have been locked away probably decades ago but somehow his powerful friends (bipartisan) kept him safe.
  - dmix 7y ago
    > On 8 November 2007, Kaloyev was released from prison, because his mental condition was not sufficiently considered in the initial sentence.[12] He got off because of a process technicality on his sentencing (aka due process) not because of a lax criminal justice system. 8yrs for "a charge that falls between murder and manslaughter in Switzerland" would be pretty standard in most countries. The mental state and motives always plays a large role in determining someone's level of guilt. As it should. Plenty of people get off because the prosecutors and judges are either overzealous or not following protocol, which ultimately leads to the opposite happening (legitimate criminals getting off easy).

miohtama 7y ago

Meanwhile Amazon pays $0 tax on $11B profit https://finance.yahoo.com/news/amazon-taxes-zero-180337770.html?soc_src=social-sh&soc_trk=tw https://finance.yahoo.com/news/amazon-taxes-zero-180337770.h...

briandear 7y ago
Very misleading. The actual answer isn’t easily fit into a campaign sound byte, but here is a better analysis: https://www.wsj.com/articles/does-amazon-really-pay-no-taxes-heres-the-complicated-answer-11560504602 https://www.wsj.com/articles/does-amazon-really-pay-no-taxes... Let’s also not forget that 44% of Americans didn’t pay federal income taxes.
- shard972 7y ago
  44% of Americans live in relative poverty to the owner of amazon.

ckastner 7y ago

I would challenge the title's assertion somewhat; at least, when Canadian banks are involved (as one would assume even with shell companies). Canada participates in the Automatic Exchange of Information (AEOI) [1]. That means that even though some of these companies might not be required to file tax reports, the banks where they hold their accounts most certainly have to report the account holder and, where applicable, all beneficial owners [2]. Simply put, if I, personally, held money at a Canadian bank either directly, or indirectly via a shell company, I might not have many reporting requirements with the Canadian government directly, but the bank would have reporting requirements, which would ultimately lead to the bank's reports landing on the desk of my home country's tax authority [3]. The only way around this is the bank not keeping their AML/KYC records as straight as they should, but supervisory authorities usually come down hard on those cases. [1] https://en.wikipedia.org/wiki/Common_Reporting_Standard https://en.wikipedia.org/wiki/Common_Reporting_Standard [2] https://en.wikipedia.org/wiki/Beneficial_owner https://en.wikipedia.org/wiki/Beneficial_owner [3] Provided both countries actually exchange information, which is the case for dozens of countries as of now. That includes Canada, Switzerland, and many other countries one might consider a "tax haven". It doesn't include the USA, however. Many would say that the USA are the last real tax haven.

RandyRanderson 7y ago
You're assuming that anyone with the authority to stop this , wants to. IF someone wanted to stop this, I'm sure they'd be able to get the info.

ttul 7y ago

I have incorporated many companies in Canada and have always marveled at the lack of vetting. You’d think they would want to see some identification on the incorporation docs. But no. You just fill in a web form and pay $20 or whatever.

ticmasta 7y ago
You have most certainly never incorporated a Canadian corporation online for $20. That's the fee for filing an annual return for a federally incorporated company; the vast majority of companies are registered provincially.
- ttul 7y ago
  Apologies. I missed a zero. https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs06939.html https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs06939.html You can incorporate federally and leave it at that. Extra-provincial registration is required if you carry on business within a specific province.
  - abledon 7y ago
    could you do a youtube tutorial series? I'd love to see the easy process documented.
- Scoundreller 7y ago
  Fed incorporations are $200+ Provincial/territorial corps are all around $300+, but don't have the $20/year filing fee.

deleted 7y ago

[deleted]

msie 7y ago

No wait, now it's the US: https://www.theguardian.com/world/2019/nov/14/the-great-american-tax-haven-why-the-super-rich-love-south-dakota-trust-laws https://www.theguardian.com/world/2019/nov/14/the-great-amer...

deleted 7y ago

[deleted]

AzzieElbab 7y ago

This is so ironic considering how much taxes Canadians pay themselves