KPMG pressed for details on tax scheme
NDP wants list of employees and clients involved in plan catering to rich Canadians
OTTAWA— The New Democrats are pressing for more details around a discontinued tax service offered by KPMG that allowed wealthy clients to avoid paying Canadian taxes. The NDP wants the House of Commons’ finance committee to force the accounting firm to release the names of employees and 27 clients who set up and used a tax shelter scheme in the Isle of Man.
Greg Wiebe, a partner and former head of global head of tax at KPMG, told the committee the plan was set up in 1999 and complied with the laws of the day.
“From the time that this particular plan was developed, there was 13 or 14 years before the legislation actually shut down some of that similar planning,” Wiebe told the MPs on Tuesday.
“We determined back in 2003 that (the plan) was something that we were no longer prepared to implement as an organization . . . If we decided in 2003 that we were no longer going to implement that plan, absolutely we would not implement that plan today.”
Wiebe said KPMG no longer provides tax shelter services to individual clients.
A CBC News investigation into KPMG’s tax plan uncovered that at least 27 wealthy clients dumped $130 million into shell companies set up on the Isle of Man, off the west coast of England.
For their services, KPMG pocketed between $1.5 million and $1.6 million in fees, with an average fee of about $100,000.
The CBC reported in March that the Canada Revenue Agency had offered amnesty to 26 of those clients, shielding them from prosecution if they paid back what the tax authorities determined they owed.
Wiebe was grilled about the details of that settlement by Liberal MP Jennifer O’Connel (Pickering-Uxbridge), who asked if KPMG was also granted amnesty or forced to pay restitution under the deal.
“Because of settlement privilege, I can’t talk to the details of the settlement at all,” Wiebe responded. Tax-dodge schemes have made headlines in Canada and around the world through the Panama Papers, an unprecedented trove of documents detailing secret offshore tax havens and the rich and famous who use them.
In Canada, the Star and the CBCRadio Canada have been given exclusive access to the files. On May 9, the International Consortium of Investigative Journalists plans to publicly release a partial database of 200,000 offshore corporations and associated names.
It’s not clear how the NDP’s motion to get the names of the wealthy clients, or the KPMG tax planners responsible, will play out. The govern- ment is already trying to get some of that information through the federal court, but KPMG is fighting that attempt.
Wiebe said the Isle of Man plan was used 16 times, but only 13 are known to CRA.
When asked why the firm has not disclosed all the names, Wiebe said that KPMG’s responsibility is to protect their clients’ affairs.
“That’s exactly the point of the court case that is before the federal court,” Wiebe said. “It is our view that it is our responsibility to keep our clients’ affairs private, and we take that responsibility very seriously.”
Outside the committee room, NDP finance critic Guy Caron said it was important to get the names of both the tax planners and clients to inform the committee’s investigation into tax avoidance.
“If we really want to pursue this, if we really want to work towards ensuring Canadians can trust the system, we need to have all the information,” Caron told reporters.
“We want to give the committee the possibility of pursuing further the study to ensure that we’ll have some answers.”
Under opposition questioning in the Commons Tuesday, Prime Minister Justin Trudeau said his government is working with CRA to ensure “all Canadians and all companies play their fair share of taxes.”
“We know that Canadians expect their government to uphold the rules, and that is exactly what we are going to do,” Trudeau said.