Finance Committee on Nov. 19th, 2025

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Deneault. We have to stop there.

Thank you, Mr. Simard.

We'll continue with Mr. Genuis for five minutes.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you, Madam Chair.

It's great to be back at the finance committee for this study of tax havens.

I would like to set the context a bit. Tax havens are when rich and well-connected people and companies develop creative structures to try to avoid taxes. Tax avoidance is legal, but governments should try to prevent structures for tax avoidance that allow wealthy and well-connected people to exploit loopholes that aren't available to normal people.

I think a lot of these issues are technical in nature, which means that trust is very important—that the public can trust that their leaders are on their side, trying to solve these problems, trying to make the system fairer, and that they're not playing for the other team. This is why, when you have a prime minister or other leaders who are personally invested in tax havens and who benefit from the continuing existence of these tax avoidance structures, that obviously creates problems for trust. They are personally invested in outcomes that are contrary to the public interest, contrary to what most people would want—which are solutions to the problems of aggressive tax avoidance, keeping money out of the system and effectively requiring everyday hard-working Canadians to pay more taxes.

Mr. Ward, you've done a lot of work specifically on Brookfield, as we've discussed, which used to be a company that the Prime Minister led, and he's still invested in it. I wonder if you could speak to the issues of trust and conflict of interest around having a prime minister or leaders in general who are, on the one hand, maybe professing to be concerned about these problems but who are, on the other hand, personally invested in the continuing existence of structures that allow tax avoidance for their own advantage.

[Jason Ward]

To piggyback on comments made by Professor Deneault, I'll say that I think trust is deeply undermined. I think the general public in Canada is widely aware that some of the largest multinationals—Brookfield included and a lot of U.S. multinationals—pay such low tax rates when workers, who get paycheque and payroll deduction of their taxes, pay full freight and expect more for their dollar from public services.

It completely undermines trust in the system if you have small business operators who can't afford to hire “Big Four” accounting firms, who can't afford to hire a team of tax lawyers, who can't set up Swiss bank accounts and tax haven subsidiaries. They're paying the bills for the big corporations that are using those same services, and it completely undermines trust in the tax system and in public institutions overall.

I think this is the reason that you have people like Donald Trump and Bolsonaro; it's that people have been impacted negatively by globalization. They can see that the richest and most powerful in the world are benefiting from this system that they designed, that they continue to influence and that they continue to write the rules on.

I completely agree with Mr. Deneault in terms of a unitary taxation, where you're looking at a company as a whole and are taxing it as a whole entity. That does happen in 27 U.S. states. There's an opportunity to close a loophole in those states so that they're not able to shift income offshore. There's a model that exists. This was part of the OECD pillar one proposal, a small part of it. It's been legitimized as a practice, and it really needs to carry forward. I think—

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you.

For a further point of precision, in the minute or so I have left.... What you're describing is people who are designing the rules and also personally benefiting from the rules, allowing tax havens to continue to operate.

Having Mark Carney as our Prime Minister, coming from Brookfield and continuing to be invested in Brookfield, is effectively like having someone say, “Okay, now I'm the referee. Now I'm adjudicating the system—or am supposed to be adjudicating the system—in the public interest, but I'm still on the payroll of one of the teams.” It has someone coming from Brookfield, benefiting financially from Brookfield and using these aggressive tax avoidance structures while in a position in which they're supposed to be defending the public interest. However, they're personally invested in an outcome that is, at best, partisan to one side of it, but likely is contrary to the public interest and the common good in general.

[The Chair, Liberal, Karina Gould]

Give a very brief response, please. You have about five seconds.

[Jason Ward]

Absolutely.

I think you have to have trust in the system. If Mark Carney wants to come clean as the Prime Minister and move forward on this, I think that the government should be putting forward legislation on public country-by-country reporting.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Ward.

That concludes the time.

We'll continue with Mr. Turnbull, please, for five minutes.

[Ryan Turnbull, Liberal, Whitby, ON]

Thanks to the witnesses for being here.

It's good discussion today.

I want to try to just ground our discussion here in some facts. From my perspective, the government has done quite a number of things over the last decade to address these issues. I think we should all acknowledge some good steps have been taken.

For example, Canada implemented pillar two, by enacting the Global Minimum Tax Act, effective beginning in 2024. The government also announced its intention to implement the secondary backstop rule, known as the undertaxed profits rule, which would be effective December 31, 2024.

We also have moved forward with country-by-country reporting. That's Action 13, introduced in Canada, in effect as of 2016. New limitations on interest deductibility, Action 4, were implemented in Canada under the excessive interest and financing expenses limitation rules, effective October 2023. We also moved forward with new hybrid mismatch arrangements, Action 2, adopted in Canada, in effect as of 2023. Enhanced mandatory disclosure rules, Action 12, were announced in budget 2021 and received royal assent in 2023. Exchanges among the CRA and other tax authorities of certain tax rulings that could give rise to base erosion and profit-shifting concerns have also been moved forward with; these are Action 5. Enactment in 2019 of the base erosion and profit-shifting multilateral instrument, Action 15, was moved forward with, and Canada has endorsed the changes made to the OECD's transfer pricing guidelines.

Budget 2025 also includes modernization of Canada's transfer pricing rules, including administrative improvements; strengthening the general anti-avoidance rule; a crypto asset reporting framework; and a common reporting standard, which would be effective January 1, 2027. We're also moving forward with a number of amendments to the Global Minimum Tax Act, which I think are positive steps in the right direction.

In budget 2025 we intend to limit the deferral of refundable tax on investment income. We're also moving forward in the budget with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, and a financial crimes agency, which will lead enforcement on financial crimes, including money laundering and complex financial crimes, often linked to offshore tax evasion.

Those are a series of things that this government has done, and I want both of you to acknowledge that those are steps in the right direction, if you're willing to. Obviously, it's up to you, but I think those are positive steps in the right direction. I understand that you want us to do more. You're very knowledgeable about this subject matter, but can you at least acknowledge the government has done some good things for us?

Mr. Deneault, and then Mr. Ward, give a short answer, please.

[Alain Deneault]

Thank you.

The short answer is that there are only three indicators that matter.

First, there are foreign direct investments. According to Statistics Canada data, multinational corporations continue to actively transfer assets to foreign countries. When we look at the top 10 countries or companies—

[Ryan Turnbull, Liberal, Whitby, ON]

Mr. Deneault, I'm sorry to interrupt you. Could I just get you to answer yes or no to whether you think those things that I listed were positive steps in the right direction? That was the question I asked.

[Alain Deneault]

No. It’s just posturing, because there are no consequences for tax revenues that would ultimately allow the government to implement social programs on the scale that is expected. Companies continue to actively transfer assets abroad, the tax base continues to be the result of middle-class taxation, and social programs remain underfunded and poorly funded in this country.

[Ryan Turnbull, Liberal, Whitby, ON]

Mr. Ward, would you be able to answer with a short answer—yes or no?

[Jason Ward]

There has been progress, but it's not nearly enough.

Some of the progress has recently been unwound with, basically, the death of OECD's pillar two, the minimum tax. Exempting the U.S. makes it pretty useless. Pillar one, which was aimed at the largest companies in the world, is dead, because the U.S. won't adopt it.

There have been some steps forward and several steps backward as well.

[Ryan Turnbull, Liberal, Whitby, ON]

Thank you very much.

[The Chair, Liberal, Karina Gould]

That concludes the time. I'd like to thank the witnesses on behalf of the committee for your appearances today. We will take a short break as we bring on the witnesses for the next section of today's meeting. I will suspend very briefly.

[The Chair, Liberal, Karina Gould]

I call this meeting back to order. We will resume.

I'd like to welcome our second set of witnesses for today. We have Silas Xuereb, an economist for Canadians for Tax Fairness, and Sasha Caldera, the campaign director, beneficial ownership project at IMPACT Transforming Natural Resource Management.

All virtual witnesses have conducted a mandatory witness onboarding test, and I would like to make a few comments for the benefit of our new witnesses.

Please wait until I recognize you by name before speaking and, for 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: floor, English or French. This is a reminder that all comments should be addressed through the chair. You will each have five minutes for opening remarks, after which we will turn to the committee members for questions.

We will begin with Silas for five minutes.

Please go ahead.

[Silas Xuereb, Economist, Canadians for Tax Fairness]

Thanks, Madam Chair.

My name is Silas Xuereb, and I'm an economist and policy analyst with Canadians for Tax Fairness. I'll begin my remarks today by explaining why we think that tax havens matter. I think that the use of tax havens matters because they destroy any semblance of a level playing field in the economy, and Canadians are aware of this.

On a radio show during the election, when Brookfield was the talk of the town, a host asked me why it was legal for megacorporations and the ultrawealthy to shelter their income abroad but not for working Canadians and small businesses. Afterwards, I felt a bit ridiculous because I tried to explain that, well, technically the laws apply equally to people like us and megacorporations. She's right. What does it matter if on paper the same laws apply if one group has millions of dollars to hire expensive lawyers to exploit the laws to the maximum, and the other group doesn't even know the laws exist? This needs to change.

Our tax laws, other witnesses have mentioned, should be based on clear principles that are openly and democratically debated. For this, we need transparency. We need to know how much revenue is being lost and where. We need to understand the latest strategies that multinationals are using to avoid taxes.

Right now, unfortunately, it's really difficult to estimate precisely how much profits are shifted abroad every year and how much tax revenue we're losing. A Tax Justice Network report estimated that Canada loses about $15 billion in tax revenue a year to corporate profit shifting and undeclared offshore wealth. Again, it's uncertain, but if this is accurate, this is enough revenue to fully fund the long-awaited single-payer national pharmacare program and our recently implemented dental care program.

Canadians deserve better than the system as it is. We deserve to see the data for ourselves. We deserve a tax system where the spirit of our laws is upheld rather than just the letter. Of course, some meaningful reforms like the Global Minimum Tax Act and reforms to the GAAR have been implemented over the past few years. These are welcome steps but, from the data currently available, there's no evidence that the problem is getting better. In fact, it's only getting worse.

StatsCan data shows that in 2024, Canadian multinationals and wealthy individuals held over $682 billion in 15 tax havens alone. This is a 165% increase over the past decade. In case there's any doubt as to whether this is real, tangible investment, Canada has more investment in these 15 tax havens, which are home to only about 50 million people, than the rest of the world combined if we exclude the United States, where over 7.5 billion people reside.

What can we do to fix this? We can close the loophole that allows corporations to return profits from tax havens to Canada tax-free. I think this has also already been mentioned in this committee. This favourable tax treatment was originally restricted to countries with which Canada had a comprehensive tax treaty, but a regulatory change in 2009 opened the door to much wider tax avoidance by extending this favourable treatment to countries with which we only had a tax information exchange agreement, which is a much simpler document that doesn't ensure alignment between our tax systems. We can also expand transparency through public country-by-country reporting, another thing that's come up already. Again, this is something that's already been implemented by the EU and Australia. Third, we can support international processes to establish fair global standards for taxation. Now that the OECD process has stalled out, as we've already heard as well, we need to support a strong and fair UN tax convention. Negotiations for that are currently under way in Nairobi, and Canada should be supporting those as much as they can.

I'll leave it there for now. I look forward to your questions and to going into more detail.

[The Chair, Liberal, Karina Gould]

Great. Thank you so much, Mr. Xuereb.

We will now go to Mr. Caldera for five minutes, please.

[Sasha Caldera, Campaign Director, Beneficial Ownership Project, IMPACT Transforming natural resource management]

Madam Chair and fellow committee members, thank you for inviting me to speak today. My name is Sasha Caldera. I'm campaign director for the beneficial ownership project at IMPACT. IMPACT is a natural resource governance organization, based in Ottawa, whose mission is to tackle conflict minerals and illicit financial flows. We have staff and operations in Africa and in Canada.

For the past eight years, I've been leading a coalition of three civil society organizations to advocate for a public beneficial ownership registry with our partners Transparency International Canada and Canadians for Tax Fairness. We were successful, as Canada launched a publicly accessible and searchable beneficial ownership registry that is free of cost as of January 2024.

Today I'm pleased to share my thoughts concerning offshore tax havens. It's really important to take stock of the problem that we are trying to address. Tax havens are jurisdictions commonly used by nefarious individuals to aggressively avoid or evade taxes, robbing governments of the means to fund public services that citizens depend on, such as health care, clean drinking water and schools. Committee members have heard from a variety of expert witnesses. I want to offer a novel dimension to the conversation and discuss an aspect that tax havens have in common—namely, anonymous shell companies, transparency of the ultimate beneficial owners and money laundering.

In 2025 Finance Canada published “2025 Assessment of Money Laundering and Terrorist Financing Risks in Canada”. The report builds from prior assessments, and notes:

Money laundering linked to tax evasion deprives governments of revenues and capacity to spend on public infrastructure, goods, and services. Statistics Canada estimated underground economic activity, i.e., activity that escapes measurement due to being hidden, illegal, or informal, at $68.5 billion, or 2.7 per cent of total [GDP] in 2021.

Canadian corporations possess a very high vulnerability to money laundering. There may be more than 2,000 organized crime groups operating in Canada, and transnational organized crime groups regularly use anonymous shell companies to launder the proceeds of crime. The assessment report goes further, stating:

Corporations can be structured to conceal the true ownership of property, businesses, and other valuable assets. With authorities unable to ascertain their true ownership, these corporations can become tools for those seeking to launder money, avoid taxes, or evade sanctions.

Noting the vulnerability of corporations in Canada, shelf and shell companies are a phenomenon that countries around the world are trying to tackle. World-class beneficial ownership registries have been identified as one policy tool to deter tax evasion and assist competent authorities with investigations.

Here at home, we recognize efforts by public servants at Finance Canada who are working with provinces and territories to implement provincial beneficial ownership registries. As British Columbia, Ontario and Quebec have already committed to implementing or have implemented their own registry systems, a pan-Canadian co-operative agreement to advance beneficial ownership transparency is needed so that there are no weak points across the country.

To accelerate progress, we recommend that Minister Champagne strike a collective agreement with provincial and territorial finance ministers. Provincially registered companies can send beneficial ownership information directly to provincial beneficial ownership registries. Subsequently, this information may be shared in a centralized registry system. It is worth noting that a similar agreement was reached by finance ministers in 2017.

To conclude, a pan-Canadian collective agreement will be a game-changer in the global fight against tax evasion, organized crime, corruption, bribery and terrorist financing. This is because tax authorities, law enforcement, civil society and journalists can use a public registry to pinpoint suspicious actors. Transparency-oriented policy tools are the best deterrent mechanisms to combat tax evasion, which naturally relies on secrecy.

Speaking as someone who was born in Richmond, British Columbia, a pan-Canadian agreement will mean a lot for my hometown and for communities across Canada. Richmond is one of the entry points for money laundering in Canada. The harm done to the province has been well documented, as home prices have been artificially inflated and are out of reach for much of the middle class and working class.

Thank you so much for your time. I'm happy to take your questions.

[The Chair, Liberal, Karina Gould]

Great. Thank you, Mr. Caldera.

We will now turn it over to Mr. Kelly for six minutes, please.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Thank you, Chair.

Mr. Xuereb, in the earlier panel we had today, testimony a couple of times referred to the fox guarding the henhouse. This was in reference to the fact that, for example, in Canada the Prime Minister had formerly been the chair of Brookfield, a company that your organization has identified as one of the leading tax avoiders through the use of offshore tax havens. His financial disclosure leaves one to conclude that his so-called blind trust, maybe closer to a Venetian blind trust, would contain long-term interests in Brookfield.

Do you agree that Canada is a country that does suffer from this phenomenon of the fox guarding the henhouse when it comes to offshore tax avoidance?

[Silas Xuereb]

It's certainly been a problem, not just for the current government, but for successive governments, unfortunately. We've seen a lot of people in power very closely connected to tax havens. Paul Martin was closely associated with them. We had policies under the Harper government that expanded this loophole for tax information exchange agreements, which allowed further tax avoidance.

Unfortunately, it's been a recurring problem in Canada that a lot of very powerful people have been very closely associated with the issue of tax havens. This is why we need transparency on this issue more than ever. It's so we can really see who exactly is benefiting from this and what we can do to close these loopholes.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

I would think an absolute minimum level of transparency might be the CRA giving the information that successive parliamentary budget officers have asked for so that they can measure and assess the CRA's presumptions about the tax gap.

Do you think it's important that the parliamentary budget officers get the information they have asked for for years in order to measure the tax gap?

[Silas Xuereb]

It would definitely be great to have a second set of eyes on those numbers the CRA has published. If there's a way to get the PBO those figures so that we can have [Technical difficulty—Editor] analysis of the tax gap, that would be great.

If we were able to implement something like public, country-by-country reporting, we could have not just the PBO looking at these numbers, but also civil society organizations and academics looking at these numbers. They could estimate not only the tax gap from tax evasion, which I think is what the CRA is focused on, but also the tax gap from tax avoidance. That is technically legal, but it still costs us a lot of public revenue.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Right.

One of the ways it could be done is by passing a bill that is currently in the Senate. It's identical to the bill that was passed by the Senate and presented to the House of Commons. I sponsored it in 2019 in the House of Commons. This is Percy Downe's bill. It was also passed in the Senate in 2024 and tabled in the House of Commons. It did not pass then either.

I think we have the tool. We need the willingness of the members of the governing party to get behind it and allow it to pass.

In the couple of minutes we have left, I'll ask either witness if they want to comment on the societal cost of tax evasion, aggressive tax avoidance and systematic tax avoidance. How does that shift the tax burden within Canadian society? Does either witness think it creates a problem across the board with Canadians' attitudes toward tax compliance?

I'll start with Mr. Xuereb and then go to our other witness.