Sirs et mesdames, thank you very much for this opportunity to come here to speak before your committee again.
I'll have some initial comments about the treaties with Namibia, Serbia, and Poland, but really I'll confine my comments to some of the areas of controversy that have arisen this morning with respect to automatic versus information-on-request exchanges.
I did review those three treaties that I just mentioned. They seem not controversial to me. They generally track the OECD model tax treaty. As Monsieur Castonguay mentioned, Canada has been a member of the OECD since its inception. We follow the OECD model tax treaty for the most part. While I did not conduct a detailed examination of the treaties, they seem to me to follow most of the other Canadian treaties in this area.
I would like to make a few comments about the other three treaties, though, with respect at least to the exchange-of-information provision. This is a very fast-moving area. In defence of the Department of Finance, very few countries historically ever agree to automatic information exchange, but really we've seen in the last six months an explosion of activity in this area.
In particular, in April it was revealed through the ICIJ, the International Consortium of Investigative Journalists, that they had received the largest data leak in history, involving over 2.5 million documents and a suspected 450 Canadian taxpayers, according to the CBC.
Incidentally, in my last appearance I couldn't speak about this, but since the CBC has publicly disclosed their investigation—and I have been retained by them since the fall to review aspects of the data leak—I can now share with the committee some of the findings, at least those that have been publicly reported. The ICIJ leak created a controversy, particularly in Europe. The EU commission is now pushing for automatic information exchange.
With respect to countries like Luxembourg and Switzerland, recently they've agreed to engage in automatic information exchange with countries like the United Kingdom. They call it a “Rubik agreement”. It's slightly different from historical agreements; it's complicated, but you either exchange information on an automatic basis or the non-resident taxpayer pays a gross withholding tax at a rate of 30% or 40%, depending on the agreement.
Similarly, the U.K. has managed, just in the last few months, to reach automatic information exchanges with some of the tax haven affiliates or former colonies of the U.K., like the British Virgin Islands—again, identified as one of the major tax havens in the ICIJ data leak—and other countries like the Isle of Man. So there's been this recent push in favour of automatic exchanges.
The three treaties that I'll now touch on very briefly are interesting. Hong Kong I think is still consistent with the OECD model treaty. It inserts wording that says they are not required to engage in automatic exchanges or spontaneous exchanges. It's a somewhat redundant statement in this new agreement in that, again, historically Canadian treaties, based on the OECD model, envisioned three types of information exchanges: automatic, requests on demand, and spontaneous. The Hong Kong treaty doesn't carve out the potential, at least, for automatic or spontaneous exchanges. Anyhow, it's just an interesting treaty amendment that I haven't seen in the past.
Luxembourg and Switzerland seem to have taken more care to ensure that Canada will not be able to exchange on an automatic or spontaneous basis. The problem with this is that the OECD model commentary, as it currently stands, indicates that article 26 follows those three routes. If we agree to at least the latter two tax treaties with Luxembourg and the U.K., we're no longer following the OECD model treaty.
But again, things are moving so quickly it's understandable that Finance may have felt pressure in the last year to conclude these treaties on the basis that it did.
Thank you, sir.