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CRA Found 35 Tax Evasion Cases in Panama Papers Leak, 5 Years Later | UKTN News

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Five years after one of the world’s largest financial document leaks exposed transactions in tax havens of politicians, athletes, celebrities and mobsters, the Canada Revenue Agency found the money missing in 35 of the hundreds of Canadian cases she analyzed.

The agency has not had a single criminal charge filed against anyone as a result of the Panama Papers.

Other countries, however, have filed tax evasion charges, obtained convictions and collected hundreds of millions of dollars in taxes thanks to information in the Panama Papers.

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“I felt patient – it takes time to investigate and prosecute – but it’s been five years now,” said Toby Sanger, executive director of the Canadians Advocacy for Tax Fairness. “We have just seen too little compared to what has happened in other countries.”

In updated data provided to UKTN and Radio-Canada, the CRA said its research identified around 900 Canadian people, businesses and trusts in the Panama Papers leak. An initial screening of these taxpayers determined that about 60 percent of them, or about 540, “complied with their tax reporting obligations” so that they did not warrant an audit.

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Of the remaining cases, at the end of last year, nearly 200 audits were completed, and 160 more are still ongoing.

Of the audits completed, 35 resulted in new taxes or penalties totaling $ 21 million, the CRA said.

There are several reasons why so many people and businesses with connections to bank accounts or companies established in offshore tax havens might not have tax payable, the CRA said. These include: instances where someone created an offshore shell company but never used it for anything, or used it to purchase an overseas vacation property that they still own , therefore no tax is due yet. They also include instances where a Canadian listed in the Panama Papers was not the actual owner of a business with which they were associated, but perhaps they were simply serving as a paid front.

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“It is important to note that the presence of a person’s name on this list does not imply tax non-compliance from a Canadian tax perspective,” the CRA said in a statement.

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A global tax windfall of $ 1.7 billion

The Panama Papers, publicly revealed five years ago on April 3, 2016, was one of the biggest financial document leaks the world has seen. The 11.5 million documents, from 200,000 accounts based in a range of offshore locations, came from Panama City-based global law firm Mossack Fonseca, which closed permanently in 2018 amid the scandal.

The leaked files have exposed the murky assets and tax transactions of everyone from prime ministers and presidents to football players, movie stars and notorious criminals, and have prompted many countries to prosecute those exploiting tax havens. and crack down on tax evasion and assault. tax evasion.

Data compiled by the Washington-based International Consortium of Investigative Journalists, the organization that coordinated reporting on the Panama Papers by global media, including UKTN, shows that the equivalent of at least 1.7 billion dollars dollars in taxes and fines was recovered by tax agencies. in two dozen countries last month.

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The totals include a maximum of $ 317 million collected by tax officials in the UK, $ 246 million recovered in Germany, $ 106 million claimed in Ecuador and $ 21 million in tiny Malta.

While Quebec allowed voluntary disclosures of people in the Panama Papers, the federal government usually not, which is one of the reasons its early transport is lower.

Some countries have had proportionately worse results than Canada: Austria (9 million inhabitants) recovered the equivalent of 3.4 million dollars thanks to the Panama Papers and Mexico (126 million inhabitants), recovered a relatively modest amount of $ 27 million.

The $ 21 million the CRA contributed at the end of last year is up from the $ 15 million in taxes and penalties two years ago.

The agency could not disclose what part of this sum was actually collected. The CRA said taxpayers could owe money for different tax years due to various contributions, and repay it in installments that do not determine what amounts arise from which tax debts.

Marwah Rizqy, a tax law professor and Quebec lawmaker, says a former senior CRA official once told her the agency believes criminal investigations and prosecutions are too expensive. (Sylvain Roy Roussel / UKTN)

The CRA also said the 160 Panama Papers audits still underway would likely be a more lucrative share of unpaid taxes, as they are “the most complex and difficult audits.”

“High net worth taxpayers often have complex tax arrangements that result in lengthy information gathering processes,” the agency said in an email. “These audits, where a nonconformity is identified, can take a long time and usually result in significant evaluations.

Abandoned criminal investigations

Even if the CRA’s tax potential increases, it seems less likely that a Canadian named in the Panama Papers will end up in jail for tax evasion.

Two years ago, the agency said it had five ongoing criminal investigations due to the Panama Papers. But he has since dropped three of them, without any charges being laid. The other two are in progress. The CRA noted, however, that new investigations may be opened as more information becomes available.

Marwah Rizqy, a professor of tax law at the University of Sherbrooke and a provincial Liberal member of the Legislative Assembly of Quebec, said she once heard from a senior CRA official that the agency preferred to negotiate settlements amicably because criminal investigations and prosecutions are too. expensive.

“Financial and tax crimes, which are particularly complex, are not taken seriously,” she said. “It means we have more or less a two tier system.”

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