Mr. Rankin, it's your round again.
Evidence of meeting #129 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was treaties.
A video is available from Parliament.
Evidence of meeting #129 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was treaties.
A video is available from Parliament.
11:35 a.m.
NDP
Murray Rankin NDP Victoria, BC
Thank you.
Mr. Castonguay, in response to my colleague, Mr. Caron, you talked about tax evasion being a multi-faceted problem, of which these bilateral tax conventions are but one element.
Presumably, you talked about Canada doing its work at the OECD. There's also the G-8, which is meeting right now in northern Ireland. Mr. Cameron, the Prime Minister of England, seems to have a preoccupation with dealing with tax evasion and tax havens, but Friday's Globe and Mail had a headline that read, “Has Canada become the bad guy of the G8 by fighting tax transparency?” A headline in the Financial Post reads, “Canada slammed for lagging behind in fighting tax evasion as G8 summit looms”.
I don't get the impression that Canada is really doing the heavy lifting on this with Mr. Cameron and other colleagues. Is that your impression, or is it just the media in Canada?
11:35 a.m.
Senior Chief, Tax Treaties, Department of Finance
The G-8 summit is on as we speak, and today and tomorrow, and I think we should await the conclusion of the leaders on that.
11:35 a.m.
NDP
Murray Rankin NDP Victoria, BC
Right. Maybe we'll come back to that with other witnesses.
I want to talk to you about the TIEAs, the tax information exchange agreements. You talked about 60 having been negotiated, and six are in negotiation stage. Several experts, some of whom we'll be hearing from later today, have said that these on-demand agreements really accomplish very little because you have to know what to ask for in order to get any information back.
I'd like to ask you, and perhaps Mr. Cook may have some information on this as well, how often have we used TIEAs, and how much information have we received as a consequence?
11:35 a.m.
Senior Chief, Tax Treaties, Department of Finance
I don't have information on that. I think the Canada Revenue Agency would have an answer to that question, but I can't—
11:35 a.m.
NDP
Murray Rankin NDP Victoria, BC
Mr. Cook, how often have TIEAs been utilized and how much information have we obtained over the years in using them?
11:35 a.m.
Senior Legislative Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance
I'm sorry. I don't have any comments other than Mr. Castonguay's.
11:35 a.m.
NDP
Murray Rankin NDP Victoria, BC
I ask because some experts have said that they're really quite ineffective—and when we hear from them, I'm going to ask them this same question. “You don't know what to ask for, so how are you going to get anything back?” That's their simple position.
But you have no information. I'll ask the experts later.
I want to go back to the specifics of Bill S-17. You referred, for example, to Serbia and Poland, Mr. Castonguay, as being two countries with which we may be able to have automatic information exchange with. I just don't know how it works, if you will, bureaucratically or administratively.
We've negotiated this open agreement contemplating tax information exchange, as in article 25. We say that we'd like to now move to automatic exchange. They say they don't want to. What happens then?
11:35 a.m.
Senior Chief, Tax Treaties, Department of Finance
On automatic exchange, first of all, the revenue agencies under the treaties are tasked with the administration of the treaties, and they can enter into agreements among themselves—MOUs—on any aspect relevant to the administration of the treaty. In most cases, automatic exchange information is achieved by way of concluding a memorandum of understanding between taxation authorities.
Of course, both taxation authorities must be willing to do that. If they decide they're not interested, there's not much we can do.
11:35 a.m.
NDP
Murray Rankin NDP Victoria, BC
So just to be clear—I'm sorry for not understanding—if we ask for that and they say no, that's it? Would we have to enter a subsequent protocol?
For example, in all of the work we're doing at the OECD and at the G-8, let's say we end up concluding, as many of our critics have said, that we need to move to automatic information exchange to have meaningful information. We ask Serbia. We ask Poland. We say, “Hey, you just signed this convention with us.” They say, “Sorry, but we don't want to do that.” Again, what is the answer? What do we do?
11:40 a.m.
A voice
[Inaudible—Editor]
11:40 a.m.
Senior Chief, Tax Treaties, Department of Finance
The provisional exchange of information in the treaties accommodates three types of exchange. It doesn't make the automatic exchange mandatory, right? It is something that both sides need to be willing to do in order for it to happen.
11:40 a.m.
NDP
Murray Rankin NDP Victoria, BC
Wait a minute. So if they say no, that's the end of the story, right?
11:40 a.m.
NDP
Murray Rankin NDP Victoria, BC
Okay.
The other thing we've talked about, aside from automatic information exchange, is the beneficial ownership rules. You're familiar with the notion of trying to find out who really is behind these shell companies that do business abroad and hide their money in tax havens.
Under the general provisions of Bill S-17, of article 25 and the like, which deal with information exchange, and the general broad rules, would it be possible without renegotiation to acquire beneficial ownership information?
11:40 a.m.
Senior Chief, Tax Treaties, Department of Finance
I think my answer to that is that the convention allows the taxation authority to ask for any information that is relevant to the administration of taxes—any information.
11:40 a.m.
NDP
Murray Rankin NDP Victoria, BC
So the same problem would occur if they said no, as you described already with the automatic information.
11:40 a.m.
Senior Chief, Tax Treaties, Department of Finance
Well, they have an obligation to apply the treaty in good faith, so if they have the information, they have to get it to us. If they don't have the information, they have to make their own efforts to get it and give it to us.
11:40 a.m.
Conservative
Cathy McLeod Conservative Kamloops—Thompson—Cariboo, BC
Thank you, Mr. Chair.
Thank you to our witnesses today.
Through the chair, I want to assure Mr. Rankin that the media is not always accurate, and the suggestion that we are resisting efforts to combat tax evasion is completely false. We certainly do support Prime Minister Cameron's efforts to achieve a consensus in the G-8 on tax havens and tax evasion.
It would be absolutely absurd to think that there would be any approach that we would take as a country other than to work very hard on this issue. Certainly, our history and our work globally speak to our commitment to move forward and deal with this issue.
I just wanted to make that as a general comment, because it is a very important issue.
I think the bottom line is that today we recognize that this tool is not the be-all and end-all to tax evasion use of offshore tax havens. Would you describe it—just a quick yes or no—as a tool in the tool box?
11:40 a.m.
Senior Chief, Tax Treaties, Department of Finance
It sure is one tool in the tool box, yes.
11:40 a.m.
Conservative
Cathy McLeod Conservative Kamloops—Thompson—Cariboo, BC
Also, is having a signed agreement with places like Hong Kong, even though it perhaps doesn't allow for automatic exchange, better than not signing?