Finance Committee on Nov. 17th, 2025

[The Chair, Liberal, Karina Gould]

Good morning. I call this meeting to order.

Welcome to meeting number 13 of the House of Commons Standing Committee on Finance. Today's meeting is taking place in a hybrid format.

I would like to remind participants of the following points. Before speaking, please wait until I recognize you. Those participating by video conference, click on the microphone icon to activate your mic, and please mute yourself when you are not speaking.

For those on Zoom, at the bottom of your screen you can select the appropriate channel for interpretation: either floor, English or French. For those in the room, you can use the earpiece and select the desired channel.

For members participating in person or via Zoom, please raise your hand if you wish to speak. The committee clerks and I will do the best we can to maintain consolidated speaking order.

I will remind you that all comments should be addressed through the chair.

Pursuant to Standing Order 108(2) and the motion adopted on Monday, September 22, 2025, the committee shall resume its study on the use of offshore tax havens.

Please note that, despite the best efforts of the committee clerks, we were only able to schedule one hour of witnesses for today's meeting. I apologize to the committee, but that's why we only have one hour. We couldn't get more witnesses due to scheduling.

I would like to take this moment to welcome our witnesses. We have Mr. Geoffrey Loomer, associate professor, faculty of law, University of Victoria.

We also have Julien Martin, professor of economics at the Université du Québec à Montréal.

We also have Dr. Markus Meinzer, director of policy, Tax Justice Network.

All virtual witnesses have conducted a mandatory sound check.

We will now begin. Each of you will have five minutes for opening remarks, and then we will open it up to questions.

Welcome to our witnesses. We will begin with Mr. Loomer for five minutes.

I turn the floor over to you.

[Geoffrey Loomer, Associate Professor, Faculty of Law, University of Victoria, As an Individual]

Thank you, Madam Chair and members of the committee, for the invitation to speak to you today about this important topic.

Again, my name is Geoff Loomer. I'm a law professor at the University of Victoria. I previously worked in tax practice at a large Canadian law firm. I received my Ph.D. in international tax as applied to multinational enterprises. I've been doing research and teaching in that area for the last 15 years.

I'm sorry that I couldn't be there in person today.

Tax havens are a fascinating and important public policy issue. They've been central to many of the key themes in international tax policy for a long time, those being international tax avoidance, international tax evasion, tax competition and tax co-operation.

In the last 15 years, we've seen a lot of movement, a lot of progress in this area. There is still more that could be done. It's important, I think, to take stock of where we are and what could be done today.

I've provided some speaking notes, which I think the committee has in English and French.

As a note on tax evasion, although I'm happy to take questions about that, it's not really the focus of my remarks today. I'll just say that we have made a lot of progress since 2009 in dealing with offshore evasion, mainly through enhanced information exchange and Canada's large and growing network of tax information exchange agreements. That's a positive thing.

The focus of my work has been on the much more substantial issue, in my view, in terms of revenue, of tax avoidance by multinational enterprise. I'm not an economist; I'm a lawyer, but I certainly follow the economics literature.

As you may know, the OECD, as part of the BEPS project, estimated a revenue loss—this is back in 2015—of 4% to 10% of global tax revenues, which is $100 billion U.S. to $240 billion U.S.

Canada, being a relatively high-tax country and the 10th largest economy in the world, obviously accounts for a good chunk of that. I don't have exact numbers, but I have provided the committee with charts on foreign direct investment directly from Statistics Canada, compiled by the Department of Finance. You can see, when you look at outbound investment, that the number one location or destination is the United States—that's not surprising—at about $1.3 trillion. That's the total stock of foreign direct investment there. Number two is Bermuda. Number three is the U.K. Numbers four, five and six are Barbados, Luxembourg and the Cayman Islands. What's going on there?

When you look on the inbound side, it's more the treaty havens that matter—the Netherlands, Luxembourg and Switzerland—because of the attractive treaties and attractive holding company regimes that they have.

The difficulty, when we talk about tax lost or tax avoided, is that you have to compare the tax paid with what you think should be paid under a benchmark system, the right system, which involves difficult questions of tax interpretation: What is the law, and how is it properly interpreted according to its text, context and purpose?

I will note that we have made changes to deal with specific forms of tax avoidance through what we call specific anti-avoidance rules, or SAARs. The body of those rules has grown recently as part of the OECD BEPS project. I can get into the details if people want to discuss that: the anti-hybrid rules, the excessive interest rules and, most importantly, the global minimum tax.

However, Canada has a sort of push-and-pull in our tax policy. Particularly, our dividend exemption system has been structured to enhance the competitiveness of Canadian multinationals. The rules, far from preventing or prohibiting the use of tax havens, often facilitate their use and, indeed, I would say, encourage the use of tax havens because of a policy of competitiveness. That's a long-standing issue in Canada.

If the government is concerned about the use or what it may see as the misuse of tax havens, there are three possible criticisms and three responses. One, you can criticize taxpayers and say that their planning is too aggressive and that perhaps it's unethical. Two, you could criticize the CRA and say that enforcement is not sufficient. In my experience, these two things may occasionally be true on the margins, but by far the most substantial issue is the law itself.

If we want to respond to what we see as the misuse of tax havens, we have to think hard about what our tax policy is—as I said, there's a push-and-pull there—and draft tax laws that are consistent with that policy and are coherent.

I'll leave my comments there.

I'm happy to take questions from members of the committee.

Thank you.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Loomer.

Mr. Martin, you have the floor for five minutes.

[Julien Martin, Professor of Economics, Université du Québec à Montréal, As an Individual]

Thank you, Madam Chair and members of the committee. I am very pleased to be testifying before you today.

My name is Julien Martin and I am a professor in the economics department of the l'Université du Québec à Montréal, or UQAM.

Several years ago, I participated in a study in which it was estimated that about 7% of corporate tax revenue in Canada disappears each year into tax havens. Gabriel Zukman and his co‑authors concluded that the figure was 9%. So between 7% and 9% of Canada's revenue disappears into tax havens every year, representing a significant revenue shortfall, weakening our ability to fund public services and eroding the public trust in their institutions. This therefore directly affects Canada's interests, as it does those of many other countries.

Given these facts, I would like to stress four points that I believe to be important and that may inform this committee's deliberations. The first three are drawn directly from my research and the final one relates more to future challenges.

The first point I want to make is that tax evasion through tax havens is an extremely granular phenomenon. What do I mean by that? In a 2018 paper, Ronald Davies, Mathieu Parenti and Farid Toubal showed that French multinational firms were manipulating transfer prices to shift profits earned in France to low-tax countries. In addition to showing that there was evidence of prices being manipulated and profits shifted, that article established that most of the tax avoided through these practices was the work of only 450 corporations and concerned ten tax havens. Since that study, other more recent research using other databases has confirmed that the use of tax havens and tax evasion by multinationals involves a very small number of very large corporations operating in a limited number of tax havens. This aspect, the high granularity and extreme concentration of this conduct in the hands of a few big multinationals, needs to be taken into account when considering this issue and seeking to legislate in this regard.

My second point is that tax avoidance does not only affect government revenues, it also hurts the real economy. As we often think, tax avoidance means less revenue for the government. What a recent paper by Mathieu Parenti and Farid Toubal shows is that a firm that avoids tax procures a competitive advantage over its competitors, allowing it to sell more than the others. In the United States, it has been demonstrated that in certain sectors, more large firms than small firms avoid tax. It therefore gives these large firms a competitive advantage and strengthens their dominant position. The takeaway from this second point is therefore that tax avoidance is not just a question of public revenue; it also impacts the real economy. In particular, it tends to distort competition. When we consider tax policy, it must not be considered in isolation from competition policy; rather, it must be considered alongside it.

The third point I would like to make is that Canada is relatively poor in terms of research-accessible data on issues related to tax havens and tax avoidance. Studying tax avoidance, the use of tax havens and their implications requires very detailed data, and I have been able to do this with French or American data. In the case of Canada, however, I have not had access to this data, and very few researchers, if any, have access to it. It must be noted that under the OECD's BEPS project on tax base erosion and profit shifting, large multinationals are required to report, country by country, sales, profits, taxes paid and employment, among other things. That kind of data enables us, as researchers, to better understand what is happening, in any case as regards Canada. Several countries, including EU members and Australia, are passing legislation to make this data publicly available. Canada could potentially follow this path. This is data that is already being collected. At present, it is not made public by Canada, but that is a direction that Canada could take.

My final point, which is more prospective, relates to international co-operation in connection with tax avoidance. We must keep in mind that one of the recent major advances in international co-operation focused precisely on taxing multinationals and combatting tax havens. A few years ago, the framework developed by the OECD under the BEPS project led nearly 140 countries to agree on a two-pillar solution. One of the things established by the second pillar is a global minimum tax of 15% on multinationals. The United States appears to want to withdraw from the second pillar—

[The Chair, Liberal, Karina Gould]

Mr. Martin, please wrap up your remarks, if you would.

[Julien Martin]

I will wrap up right away.

The United States is trying to withdraw from the second pillar, so this multilateral system may be at risk of collapsing. We have to keep in mind that Canada cannot act unilaterally or negotiate bilaterally with Washington: In the case of tariffs, we saw that going it alone did not work. Canada therefore needs to preserve this multilateral aspect to the extent possible.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Martin.

We're going to continue with Dr. Meinzer. I would just like to note that he is joining us from Germany today, and I know he really worked hard to make this work for his schedule, given the time change.

Thank you, Mr. Meinzer. You have five minutes.

[Markus Meinzer, Director of Policy, Tax Justice Network]

Thank you, Madam Chair and members of the committee, for the opportunity to speak.

My name is Markus Meinzer, director of policy at the Tax Justice Network, a civil society organization working globally to advance financial transparency and tax justice. My work focuses on countering illicit financial flows, including tax abuse and money laundering, through evidence-based policy research and risk assessment.

I want to make three points in my remarks.

The first point is that there is no universally agreed-upon definition or list of tax havens. Labels often reflect geopolitical bias determined by powerful actors rather than objective analysis.

Contrary to the stereotype of tropical islands as the primary offenders, our research shows that many developed economies, including OECD members, are central to enabling offshore abuse. We distinguish between corporate tax havens, which enable multinational profit shifting, and secrecy jurisdictions, which provide opacity for individuals. These categories frequently overlap in practice, but they help illustrate different channels of harm.

Our financial secrecy index combines the secrecy score, measuring the strength of transparency rules, with a global scale weight that reflects each jurisdiction's market share in offshore financial services. On this index, the United States ranks first, supplying more financial secrecy than any other country. Likewise, on our corporate tax haven index, many OECD member states—not only small island jurisdictions—rank among the world's biggest enablers of corporate profit shifting.

Canada is directly affected. Our most recent report, “State of Tax Justice 2025”, estimates $27 billion U.S. in revenue losses for Canada from multinational tax abuse between 2016 and 2021, with $13 billion U.S. attributable directly to U.S.-parented multinationals. Almost half of the harm is caused by U.S. multinationals.

[The Chair, Liberal, Karina Gould]

I'm sorry, Dr. Meinzer. We're having trouble with the interpretation.

We're just going to pause for a minute until we figure that out.

[Markus Meinzer]

Okay. Thank you.

[The Chair, Liberal, Karina Gould]

Okay. Let's try again.

You can just pick up where you left off, and members will let me know if there are issues with the interpretation.

[Markus Meinzer]

Okay.

The second point is that the OECD has consistently failed, over decades, to counter these problems effectively, and the best chance for progress now is at the United Nations. The OECD's two-pillar solution, which has already been mentioned, was initially presented as a breakthrough but has been weakened and delayed, largely due to the resistance of the United States and its dominance of the OECD. The United States now even threatens economic retaliation against countries implementing the remaining rules affecting U.S. multinationals.

Therefore, acceptance of the side-by-side arrangement would undermine the remainder of the global minimum tax by exempting U.S. multinationals, which are responsible for the largest share of the global profit shifting. Side-by-side is reminiscent of medieval emperors, who were above the law that they themselves had set for everybody else. The exempt beneficiaries include tech giants closely aligned with President Trump.

This pattern is not new. The OECD has long granted the United States special privileges. FATCA and the CRS are examples.

For these reasons, Canada should oppose the side-by-side deal. However, no single country can withstand the U.S. pressure. Therefore, the only viable route is collective defence of tax sovereignty at the United Nations, with the potential to establish a truly democratic and fair system of global tax governance. Meaningful Canadian engagement is essential to developing reforms that can withstand the pressure from the U.S. and its libertarian anti-tax ideologues. By working with countries such as Germany, Spain, Brazil, South Africa, India and many others, Canada can help champion a strong, progressive UN tax convention.

Finally, the third point is that Canada can take unilateral steps now to reduce illicit financial flows and to protect its revenue base. For example, Canada could extend its public beneficial ownership register to all companies, including those that are formed in any province or territory, and also extend it to trusts. Second, Canada could enact public country-by-country reporting to expose profit shifting and strengthen tax compliance. It is gaining global momentum as a tool for holding multinationals accountable. As has been mentioned before, the European Union and Australia have already legislated for it. It is a safe policy.

Thank you for your attention, and I'm very much looking forward to your questions.

[The Chair, Liberal, Karina Gould]

Great. Thank you, Mr. Meinzer, and thank you to all of our witnesses for those opening remarks.

Mr. Lefebvre, from the Conservative Party, you have the floor for six minutes.

[Éric Lefebvre, Conservative, Richmond—Arthabaska, QC]

Thank you, Madam Chair.

I want to say hello to my colleagues now that we are back from a week in our ridings.

I also want to thank the witnesses for being with us today.

Professor Loomer, in your opening remarks, you said the problem was the law itself and it had to be consistent with policy. I would like you to talk about that a bit, please.

[Geoffrey Loomer]

Sure. Thank you for the question.

When I say that, I do not have the authority to decide what the policy is. I've looked at these rules a long time, and I will say that the policy has a push-and-pull to it, so we have long-standing rules that allow multinationals to have their dividends come back to Canada exempt from corporate tax. There are ways they can minimize their corporate tax elsewhere, so that's the source of a lot of the profit shifting that comes into Canada.

However, when governments, both Liberal and Conservative, have tried to enact rules that will stem that practice, those rules don't get enacted, for various reasons—lobbying, pressure from the law and accounting firms on the advice of their clients, etc.

However, there's a balancing to do to decide if the rules that allow an exemption from corporate tax on dividends coming back to Canada provide a net benefit to us. Is there a net economic benefit? I think that in the seventies, the belief was yes. We're a net capital importing country. We need this to compete with the U.S., Germany and Japan.

Do we need that in 2025? It's not clear to me that we do. It's not clear to me that the policy makes sense: for example, to allow interest deductions in Canada or scientific research credits in Canada to fund offshore investment that then results in income that's brought back to Canada with no tax. You get a deduction here, and when the income comes back, you have no inclusion. Maybe that makes sense from a competitive point of view, but it requires serious consideration whether that's the right call.

[Éric Lefebvre, Conservative, Richmond—Arthabaska, QC]

Thank you.

Along the same line, I recall that the Prime Minister tried to defend Brookfield's use of tax havens by saying that it was a way of guaranteeing payment of taxes in Canada. Do you agree with the Prime Minister's statement?

[Geoffrey Loomer]

Thank you.

If I look at Brookfield and other large Canadian multinationals—the largest financial services companies, like Manulife and Sun Life; the big banks, like RBC; and the big energy companies, like Enbridge—I would expect that all of them have some tax haven use. Barbados was the traditional choice. It's shifted more and more to Bermuda, because 0% is better than 2.5%, and the flight from Toronto is shorter.

I expect there's a lot of that in the large Canadian multinationals. It is a normal practice. As I said, our rules have facilitated and indeed, I would say, encouraged that, so the Prime Minister is right when he says that.

Does it result in some net benefit to us? It's a complicated question. You would say that, well, it's good for everyone who has an interest in the Canada pension plan, because Brookfield invests the money and makes better profits because there's less tax paid, and that perhaps results in more income tax back here eventually when people are withdrawing their pensions. However, it's difficult balancing that.

[Éric Lefebvre, Conservative, Richmond—Arthabaska, QC]

Thank you.

Mr. Meinzer, I would ask you the same question. We have heard from Mr. Cochrane, the senior economist at the Canadian Labour Congress, who, on the other hand, described the Prime Minister's statement that tax avoidance guaranteed payment of taxes in Canada as laughable. What do you think about that?

[Markus Meinzer]

I'm afraid that I'm not very familiar with the Brookfield case to be able to make an informed statement about this.

Usually, I would tend to argue that lowering taxes here in order to gain more revenue is a bad idea, and enticing the use of tax havens with the aim of increasing revenues here is also in the same category for me—not a convincing policy.

Usually, one would expect that the Laffer curve.... The long-held belief, coined in the Reagan era, that when you are lowering taxes, more investment will come and, in the end, you will end up with more revenue is just a myth and has not been proven to hold true anywhere in the world. The empirical evidence is firmly to the contrary. When you lower taxes, when you shift profits to lower-tax jurisdictions, the end result will never be increased tax revenue, at least ceteris paribus. It might coincide with another growth effect that would have happened anyway, and you would have ended up with even higher taxes had you not reduced your tax rates beforehand. This much I can say to this case.

Thank you.

[Éric Lefebvre, Conservative, Richmond—Arthabaska, QC]

How much time do I have left?

[The Chair, Liberal, Karina Gould]

You have 15 seconds left.

[Éric Lefebvre, Conservative, Richmond—Arthabaska, QC]

Right. Thanks to the witnesses for being here today.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Lefebvre.

We will continue with Mr. Leitão for six minutes.

[Carlos Leitão, Liberal, Marc-Aurèle-Fortin, QC]

Thank you, Madam Chair.

Thanks to the witnesses for participating in this exercise. Their testimony is very useful and very interesting. However, there is one thing all three witnesses have mentioned: the need to continue thinking and working multilaterally.

Mr. Martin, I am asking you my question because you have not yet had a chance to speak. Specifically regarding this need to work together and to give tangible effect to the regime that was put in place under the OECD's BEPS project after lengthy discussion, and this was in fact your fourth point: How do you see this coming about, particularly when we observe that our neighbours, the Americans, seem to want to withdraw from agreements their former president had signed?

[Julien Martin]

Thank you for the question.

Yes, the United States is threatening to withdraw from the agreement, and particularly pillar 2. The tariffs example is important to take into account here. We were using a multilateral system for international trade. However, the EU member countries, the United Kingdom and Japan decided to go off and negotiate individually with the United States. They have all lost, for now. We shall see how Canada fares.

Obviously, it is a bad idea to tackle it individually, particularly where this international co-operation is not happening, or is happening less, because the United States does not want to participate. It is a bad idea to choose to tackle it all alone and try to put policies in place unilaterally, or to want to negotiate a digital services tax bilaterally with the United States, for example.

We really have to encourage international co-operation. If Canada wants to keep making progress on these issues, which are the same for the European countries and for Japan, India and South Africa, as I said, it needs that co-operation. It cannot go it alone.