Panama Papers discovered Canada as the new Tax Haven

Mossack Fonseca actively marketed Canada as a tax haven and established shell companies here to evade taxes, according to the documents obtained by the International Consortium of Investigative Journalists and shared with the Star and the CBC.

The joint investigation has revealed that Canada's tax legislation provides favorable conditions for evading taxes, creating anonymous business entities, and cleaning illegally-gained cash.

“Canada is a good place to create tax planning structures to minimize taxes like interest, dividends, capital gains, retirement income and rental income,” reads a 2010 internal memo from Mossack Fonseca, the law firm behind the massive Panama Papers leak of 11.5 million documents detailing global tax avoidance and evasion.

Normally, any corporation based in Canada would have to pay tax on its income, but a Mossack Fonseca managing director wrote a pair of emails to colleagues in August 2010 describing a way shell companies get around this.

"Every single year, [they] just submit the annual return and annual income declaration with false information, just writing that the Canada company DID NOT HAVE ACTIVITIES," he wrote.

"In other words, they cheat a bit … It is impossible for the Canada revenue governmental system to look into such information for every single company", added.

Mossack is not the only ‘corporate service provider' operating in Canada, however. Toronto Star and CBC identified over two-dozen companies offering their services to assist corporations and private individuals in creating a tax-evasion proxy entity that could enjoy Ottawa's brilliant reputation.

According to The Star, Canada's Federal Finance Minister Bill Morneau commented on the issue in a formal statement. "We as a government, and I personally, am committed to making progress on ensuring that we are not providing any haven for any inappropriate activities and that we're having companies and individuals paying the share of tax that should be due," Morneau said.

In December, Transparency International Canada published a report stating that Canada is “very weak” on G20 corporate transparency principles, citing examples of how not only tax dodgers, but criminals and corrupt foreign officials have used Canadian corporations to launder their money.