Canada’s war against tax avoidance accelerating, domestically and on international fronts
BERNE: As Canada and the United States ramp up their efforts to reduce tax avoidance and collect more taxes, our foreign aid to corrupt regimes finds its way into Swiss bank accounts.
Canada's war against tax avoidance is accelerating, domestically and on international fronts. radical new legislative proposals will, if enacted, require lawyers to breach their solicitor-client privilege and report avoidance transactions to the Canada revenue Agency. Internationally, Canada is on a binge of signing exchange of Information treaties with tax and banking havens. The most recent one with Switzerland uses obscure language. Unlike many havens, Switzerland is actually a fulltax jurisdiction and is diligent in enforcing its tax laws. There are stringent penalties for those who do not comply with their domestic laws. An immigrant, for example, cannot become a Swiss national unless he or she proves tax compliance.
It is a different story, however, when it comes to helping other countries enforce their laws. Swiss banking secrecy is legendary. It is the "go to" place to hide dirty money. Hence, Switzerland has always been the country of choice for organized crime, arms dealers, corrupt politicians, Nazis, African, Asian and South American dictators, and russian oligarchs.
Traditionally, Switzerland would not divulge income tax - related information to foreign governments because it does not deem tax evasion fraud.
However, following pressure from the United States government on the Union Bank of Switzerland, the Swiss changed their laws to reveal the names and identities of persons connected with tax fraud. The amended laws reveal the names of some 4,500 account holders suspected of income-tax evasion in the United States.
Canada and Switzerland also have agreed to expand provisions for the exchange of income tax information. New treaty provisions provide for the tax authorities of the two countries to exchange such information as is "foreseeably relevant" for the administration and enforcement of the domestic tax laws for each country.
Now, neither country can refuse to supply information to the other country solely because the information is held by a bank or other financial institution or by any other person acting in a fiduciary capac- ity. The treaty gives the tax authorities the power to force compliance of taxpayers and to compel disclosure of information requested. "Foreseeability" has long been the lifeblood of the tort bar. It is a complex test developed over nearly 80 years. It has never been used in tax laws, as it is too uncertain a concept for fiscal purposes.
The Canada-Switzerland Protocol has an interpretative protocol to guide officials (and the judiciary) to decipher the meaning of "foreseeably relevant." The protocol says that the exchange of tax information between the two countries should be to the widest possible extent, but that Canada and Switzerland cannot engage in "fishing expeditions" or request information that is unlikely to be relevant to the case in question. -PB News
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