By now, many Canadians have heard of the Panama Papers. If you
have not heard about the April 3, 2016 simultaneous global news
release, by a large network of international media partners,
related to the work of the International Consortium of
Investigative Journalists ( "ICIJ"), you are about to. In
the weeks to come, we can expect to read and hear plenty more about
this mammoth data dump of over 11.5 million documents. The ICIJ,
the German newspaper Süddeutsche Zeitung and more than 100
other news organizations have been poring over these documents as
part of a year-long investigation.
What we do know at this early stage is that the files reveal the
offshore financial holdings of over 140 politicians and public
officials from around the world. The data reveals more than 214,000
offshore entities. The documents show how there is a global
industry that sells financial secrecy to anyone that can afford
So far, the release of the information has caused Iceland's
Prime Minister, Sigmundur Davíð Gunnlaugsson, to resign
and forced UK Prime Minister David Cameron to release a summary of
his personal tax records for the last six years. There are also
documents that suggest that close associates of Russian President
Vladimir Putin moved as much as $2 billion through various offshore
banks and private companies.
The data covers the period from 1997 to the end of 2015 and
comes from the files of the Panamanian law firm Mossack Fonseca.
This law firm has branches, affiliates and representatives all over
the world including Miami, Zurich and Hong Kong. It is expected
that the ICIJ will release the full list of companies and people
linked to these companies in May. The data itself consists of
financial spreadsheets, e-mails, corporate records and passport
information that lay bare the secret owners of companies and
various bank accounts in 21 offshore jurisdictions.
The reaction from revenue authorities around the developed world
has been predictable and consistent. All share the mantra that
'the revenue authority is committed to combatting the abusive
use of offshore jurisdictions and protecting the integrity of the
national tax system'.
The reality is that the Canada Revenue Agency ("CRA")
can be expected to sift through the information to see if there are
any Canadians that bear further examination. We do know at this
stage that there are Canadians identified in the data. This
revelation should be of major concern to anyone that had dealings
in one form or another in the offshore sphere.
The most recent Federal Budget allocated over $440 million (over
a period of 5 years) to combat tax evasion and aggressive tax
avoidance. Plainly, these funds will be used in part to beef-up the
international auditing efforts of the CRA. Furthermore, we know
that information sharing and international cooperation are both
more commonplace now than ever before. Canada has an extensive
treaty network with 92 tax treaties and 22 Tax Information Exchange
Agreements in force as of April 4, 2016. All of this provides the
CRA with a rapid way to investigate potential audit targets.
The clock is ticking for those that have been weighing the pros
and cons of making a voluntary disclosure. You simply have no time
to lose. Once an audit is commenced, the days of seeking the
protection of a voluntary disclosure are over. We are experts in
this area and if you think that you may be exposed, talk to us
immediately. We can help.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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