Canada to take on ‘disgraceful’ corporate tax avoidance
Canada will launch an ambitious new anti-avoidance program aimed at fighting multinational companies that have taken advantage of its generous corporate tax system to shift profits to low-tax countries.
The federal government is proposing that Canada’s corporate tax rate be reduced by 20 per cent in 2019 from its current rate of 37 per cent, as part of a package of tax reforms it is proposing for 2019-20.
Canada’s new corporate tax plan will also require multinational companies to publish their financial information on their website, and a new system for tracking foreign investments in Canada will be launched.
The plan also proposes creating a new independent advisory board for multinational companies.
Canada will also begin offering a new Canadian subsidiary company tax holiday to encourage foreign investment, and the government will also offer a 10 per cent tax discount on foreign investments made to Canadian subsidiaries, starting next year.
Canada has a highly competitive tax system and a high rate of corporate tax evasion.
But a new tax reform plan, called “Arao Tagayuna” or “Arakawa Project”, will make it harder for multinational corporations to avoid paying Canadian taxes.
Arakawas corporate tax code is a complicated system that allows multinational corporations with more than $1 billion in annual revenue to use the country’s system of corporate income tax treaties to shift their profits offshore, often to tax havens like the Cayman Islands, Bermuda and the British Virgin Islands.
Under the Arakawahas system, the corporations pay tax at a rate that is significantly lower than their revenues.
The tax rate can be as low as 25 per cent or as high as 50 per cent depending on the nature of the foreign business.
The proposed tax cuts are expected to raise up to $50 billion over the next 10 years, the government said in a statement on Tuesday.
The government is also introducing a new anti