Finance Committee on Nov. 19th, 2025

[The Chair, Liberal, Karina Gould]

Good afternoon, everyone. I call this meeting to order.

Welcome to meeting number 14 of the House of Commons Standing Committee on Finance. Today's meeting is taking place in a hybrid format.

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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.

I would like to now welcome our witnesses.

I would like to welcome Professor Alain Deneault.

who is joining us, as well Jason Ward, principal analyst at the Centre for International Corporate Tax Accountability and Research.

You will each have five minutes for your opening remarks, after which we will open the floor to questions.

We’ll start with you, Mr. Deneault.

You have the floor for five minutes. Thank you.

[Alain Deneault, Professor, As an Individual]

Thank you very much, Madam Chair.

Thank you for inviting me to appear before the committee.

First, I would like to note that I am a professor of ethics at the University of Moncton. I worked on tax havens actively from 1999 to 2015. Since then, I have been conducting historiographical, ethical and conceptual research on tax havens and what I more broadly refer to as “sovereignties of convenience”.

I’d like to take a few minutes to focus on the social costs of the use of tax havens primarily by the wealthy and multinational corporations, and then I will address two topics, which we can discuss at your leisure.

I’ll start by looking at the costs of tax havens on the entire domestic and Canadian community. I would say that these costs can be summed up in six points and that an overall striking picture emerges when the issue of tax havens is addressed qualitatively and not just quantitatively.

The first cost is that obviously, tax havens represent a cost for the general public because public authorities cannot tax capital that is generated here, which ought to be taxed under the law. This represents a loss of revenue for the Treasury because huge sums of money—in the billions of dollars—elude taxation every year due to the accounting practices of major corporations.

The second cost is the issue of dumping between traditional states and tax havens. This cost stems from the fact that for 45 years, traditional states have been reducing corporate income tax rates to compete with tax havens. Thus, instead of fighting tax havens, they compete with them. However, to compete with tax havens, corporate tax rates are continually being lowered. This is the second loss of revenue for the public treasury since the remaining capital is taxed at a lower rate than before. This is true, by and large, in all countries in the Organisation for Economic Co-operation and Development, the OECD.

The third cost is a truly scandalous issue relating to debt servicing. When the government fails to balance its budget by the end of the fiscal year, it resorts to borrowing from financial and industrial institutions—entities that it either no longer taxes or taxes insufficiently—in an effort to balance its budget. As a result, businesses no longer finance public institutions through taxation to ensure the existence of social programs and public infrastructure, and instead, citizens do so through debt servicing when they finance financial or industrial companies to help Canada balance its budget. This is the third major cost and it is almost exponential.

The fourth cost pertains to the tax rate for the middle class and small and medium-sized enterprises. I would add that it also pertains to taxes that impact the entire population, including the working class, thereby necessitating compensation. To achieve this, the burden shifts to captive taxpayers, who are primarily middle and working‑class individuals who contribute through consumption taxes and thus pay more tax.

The fifth cost concerns the disappearance of public services. This means that when the state cannot balance its budget, it makes cuts to services and the budget so that services that people have been entitled to for years are phased out. People seeking these services are forced to turn to the private sector.

The sixth cost concerns the pricing of services, meaning that the public has to pay for public services twice, once as taxpayers and once as users.

These six costs are colossal and literally immeasurable, which means that it is impossible to put a figure on them. What we can see is a strong trend, and if we want to imagine a world without tax havens, we would have to assume that multinational companies would pay their taxes where they generate revenue, where they do business and where they are active. They would do so at a high tax rate, which was close to 50% in Canada in 1980 if we include provincial corporate income tax. Public debt would be lower, taxes on the middle class would be lower and public services would be better and free. This is what we can already envisage.

Now, if we want—

[The Chair, Liberal, Karina Gould]

Can you please wrap up quickly, Mr. Deneault?

[Alain Deneault]

In a nutshell, there are two solutions, and that is what I invite you to discuss. The solutions can be political and diplomatic, rather than technical. A technical solution may involve a discussion on an approach based on consolidated balance sheet taxation.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Deneault.

We'll move now to Mr. Ward for five minutes, please.

[Jason Ward, Principal Analyst, Centre for International Corporate Tax Accountability and Research]

Hello. Thank you very much for the opportunity to be a witness. My name is Jason Ward. I'm the founder and principal analyst of CICTAR. I'm usually based in Australia, but I'm currently in Washington, D.C.

CICTAR is an organization that has been around for about seven years now. We specialize in detailed forensic analysis of multinational tax avoidance. Less than a month ago, on October 22, I was a witness before the ethics committee hearing and responded to numerous questions in relation to our extensive work over a number of years related to tax avoidance and the use of tax havens by Brookfield Corporation. I provided links for that committee to our previous research, which also includes several reports related to tax haven abuse by large Canadian public pension funds. I won't attempt to go through those reports, but the links have been provided to this committee as well.

Tax havens, as our previous witness stated, are a huge problem for Canada and globally. I'm going to try to focus on the solutions and not on the problem here, as I think many witnesses, previously and forthcoming, are going into details on the effects on Canada. I will cite one piece of research that was done by the global Tax Justice Network and released earlier this month, which I think was a very conservative estimate. It suggested that over a six-year period, from 2016 to 2021, $103.4 billion U.S. in profits were shifted out of Canada, resulting in a tax revenue loss of $27.3 billion U.S. That would be the equivalent to 3% of Canada's health budget. Again, almost half that estimate is related to U.S. multinational corporations.

Moving very quickly to the solution, the use of tax havens is not easy to find and is not readily disclosed by corporations, particularly those headquartered in Canada and the United States. It's very hard to fix a problem if you can't see it. Greater transparency is a crucial first step. We urge the Canadian government or opposition parties to immediately introduce legislation to implement full public country-by-country reporting for multinationals in Canada.

In Australia, public country-by-country legislation was passed in 2024. It now has the world's best reporting requirement for multinational corporations. We hope Canada can follow suit. Canada has the opportunity to go even further. In Australia, all multinationals with annual revenue of 10 million Australian dollars or over will be required to report basic financial information, including number of employees, profits, losses, taxes paid or not paid, in Australia and 40 jurisdictions around the world that are widely recognized as the most abused global tax havens.

The lobby groups representing the largest U.S. multinationals, also the world's largest tax dodgers, recently tried to persuade the Trump administration to threaten Australia over this simple transparency measure. I tell you this because it's an indication of how exposure of this information threatens the underlying business model of major U.S. corporations and other corporations that dodge taxes wherever and however they can, particularly with the abuse of tax havens and shifting profits offshore to where they are taxed not at all or taxed the least.

The European Union has also introduced a weaker version of public country-by-country reporting. Banks in the European Union have been doing public country-by-country reporting for a decade now with no impact on their competitiveness, with trackable increases in tax payments and revenues to governments, and with a declining use of tax havens.

We urge Canada to follow the Australian model and require this basic transparency measure so that government officials, lawmakers, investors and the general public can know which corporations are abusing the tax system, and where and how. Small businesses and responsible companies are at a huge competitive disadvantage if the world's largest corporations, many making record-level profits, can continue to avoid obligations to pay tax in Canada and around the world.

Tax authorities already get this data through confidential reporting through an OECD process; however, this information can't be shared and used for wider public purposes.

Making this basic financial data public also allows tax authorities to be held accountable and to make sure they are doing their job in collecting the revenue that should be paid by the world's largest companies.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Ward.

We're going to have to conclude there. Thank you so much.

We're going to begin now with six minutes for Mr. Kelly.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Mr. Ward, in your opening statement, you referred to your testimony at the ethics committee about the abuse of tax havens by Brookfield. For the benefit of this committee and its report, we'll need perhaps some of that information here for the record at the finance committee. Can you give us more information about the scale and the details of that particular example of abuse of tax havens?

[Jason Ward]

Well, we've done extensive work on Brookfield, and we've also gathered previous work on Brookfield. It is clearly one of Canada's largest tax dodgers.

All of Brookfield's operations essentially are funnelled through Bermuda, and it has had a very low effective tax rate in Canada and, frankly, in countries around the world, for a very long period of time. That is a clear red flag of major tax avoidance and extensive use of Bermuda and lots of other different tax havens to reduce its taxable income in Canada. The potential revenue loss there is in the billions and is clearly at the top tier of Canadian companies in terms of its impact on reducing funding available for public services in Canada.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

A relevant time period would include when the Prime Minister was chair?

[Jason Ward]

Our study was in 2023, I think, and looked back at the 10-year period up until 2021.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Okay. Thank you.

I'm going to go back to you, Monsieur Deneault. You appeared at this committee almost 10 years ago.

You talked about much of the same information that you talked about today: the effect of tax avoidance by the largest tax filers and the societal consequences of this. It shifts the tax burden to workers and to small businesses, and from income tax to consumption, so that regular Canadians who pay the consumption taxes are paying a larger proportion of tax.

Can you elaborate on the societal cost of aggressive tax avoidance and tax evasion?

[Alain Deneault]

You are absolutely right to point out that I said much the same thing about ten years ago.

Unfortunately, when you work on the issue of tax havens, you quickly feel like you are repeating yourself like a broken record. Since 2000, i.e., for 25 years, there have been many public reports, studies, surveys and compelling evidence on the issue of tax havens and yet from the point of view of governments, we are pretty much at the same point. There is a cognitive barrier among government officials who always pretend to be fighting abuse and fraud, when in fact much of tax avoidance is not legal, but legalized.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Let me jump in, if I may.

We have a really limited time, and I want to talk about then. Over this time period, the government was new, then, in 2016, and here we are, almost 10 years later. They talk a lot about cracking down on evasion and on aggressive avoidance, but we see no results. Can you comment on the track record now—over the last 10 years—for making progress on this?

[Alain Deneault]

When it comes to tax information exchange agreements with other countries, I have observed that we are legalizing transactions that ought to be considered fraudulent under the law. I have to sum up quickly, but I can send you more details on this subject in writing.

In short, the actions of government officials consist in reducing the geopolitical issue of globalization to technical tax matters and then using agreements to gain access to information, while legalizing transactions related to the information obtained. In other words, information about transactions taking place in tax havens is obtained, and steps are taken to ensure that such transactions are legal.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

I'm going to just jump in because time is so limited.

Not long after the testimony you gave in 2016, the Auditor General delivered a damning report that revealed that the Canada Revenue Agency will grant months or even years when it requests information from tax filers if they have offshore dealings. If they do not have offshore dealings, they have 30 days or else the tax will automatically be set. Can you comment on how this punishes regular tax filers in favour of those like Brookfield, for example, that have offshore dealings?

[The Chair, Liberal, Karina Gould]

Please give us a very short answer.

[Alain Deneault]

Indeed. That is a technical subject. The information is difficult to find and concerns operations that have been legalized. To sum up, I would say that most Canadian government officials who claim to be fighting tax havens have very often benefited from tax havens themselves. I am thinking of our last ministers—

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Deneault.

Mr. Leitão, you have the floor for six minutes.

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

Thank you, Madam Chair.

Hello, Mr. Deneault. It’s good to have you here again.

In your opening remarks, you noted that the solution was essentially political and diplomatic, but you did not have time to elaborate on that idea. I would like to focus on political and diplomatic aspects.

Could you expand on that?

[Alain Deneault]

Thank you. I’ll try to be quick.

There is no single solution to combatting tax havens, but diplomatic and geopolitical factors are certainly major issues. I think it is perfectly normal to discuss the issue of tax havens in the Standing Committee on Finance, but I also think it should be discussed in the Standing Committee on Foreign Affairs and International Development.

It is important to understand that companies are created under the law. For a company to exist, a state must have made it possible through legislation. Take the example of how the law is drafted in a tax haven like Bermuda. The Bermuda legislature passed legislation that allows the creation of tax‑exempt entities. Under Bermuda law, a tax‑exempt company can receive enormous benefits, such as pay no tax, demonstrate a lack of transparency about the identity of beneficiaries, have the potential to carry out an infinite number of transactions in all kinds of sectors, and so on. Tax‑exempt companies are allowed, provided they do not have any activities in Bermuda. In other words, Bermuda makes laws that allow commercial entities to manage capital that must be located outside the country’s borders.

That is literally political interference. This is a state making laws about how to manage capital generated outside its borders. That should be enough for Canada and other countries like France, Spain and Germany to intervene with this state. We are talking about Bermuda, a jurisdiction with an administrative structure the size of the Saint‑Jérôme municipal council. States should put pressure on Bermuda’s legislative body, and make it understand that this legal provision is an intrusion and that they are challenging it politically. Possible sanctions must also be considered.

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

To minimize the adverse effects of tax havens, it seems that the solution must also come from the diplomatic side. Indeed, if Canada were to act alone, it would face challenges trying to change the laws of Bermuda or other countries. However, something can be achieved if Canada were to act in concert with the member countries of the OECD, the Organisation for Economic Co-operation and Development. I think this is somewhat in line with the reforms carried out by the OECD in recent years, thanks in particular to the very interesting work of Pascal Saint‑Amans, for example.

I think that we should continue and accelerate this international effort to limit the scale of the issue in these territories.

[Alain Deneault]

I would disagree with you. I’m not at all impressed with the OECD’s efforts, insofar as Pascal Saint‑Amans’ approach is to say that the issue is technically complicated to an unimaginable degree, that 200 different tax regimes need to be harmonized, that it is a real headache, that there is such an enormous amount of synthesis work to be done that it will never be finished, and so forth.

Small measures are introduced that undoubtedly result in progress here and there. However, we need to keep in mind that we are dealing with multinationals that have armies of lawyers, accountants and tax specialists to circumvent the structures we are trying to put in place.

I am talking about something that is quite different. It is not good enough to say that the problem is technical and that tax regimes need to be harmonized. There needs to be a discussion at a political level, saying; you have passed laws on how a company operating in our country will be taxed. You have created a kind of buffer between traditional states and tax havens, where the money ultimately disappears and is no longer formally in the state where it was generated because it has been transferred to an entity in Bermuda and Bermuda does not want it in its country. There is this kind of no-man’s land, which is problematic.

Canada has to do more on the political front, and, I would say, on messaging. It must stand up and say things loud and clear.

All western heads of government spoke out when the major leaks including the Paradise Papers, the Panama Papers, LuxLeaks and SwissLeaks came out. The German Chancellor, the British Prime Minister, the President of the United States and the President of France all made statements. Who spoke about the leaks in Canada? Ms. Lebouthillier, the Minister of National Revenue, who was in office at the time. The Prime Minister did not get involved, as if the issue were minor and technical.

Canada has a lot of work to do in this area.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Leitão and Mr. Deneault.

We will now continue with Mr. Simard, from the Bloc Québécois, for six minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much, Madam Chair.

Thank you for your presentation, Mr. Deneault. It was very enlightening.

If I understand you correctly regarding the various costs you spoke about, including the social costs and the various effects of tax havens, to a certain extent, we may be able to adjust our policies and standards to compete with the tax sector allowed in tax havens. That is more or less what you meant.

Regulation 5907(1) of the Income Tax Regulations allows for the elimination of double taxation. A quick interpretation would tell us that the government drafted legislative provisions that contradict the spirit of its law.

Does that reinforce what you are saying in some way? Do you have any other examples of government regulations that contribute to this situation, where we may be adjusting our policies to suit the interests of tax havens?