Backgrounder: Tax Fairness and Beneficial Ownership Transparency

The Government of Canada is committed to ensuring all Canadians pay their fair share of taxes.

Appropriate authorities need to know who owns which companies in Canada to counter international tax evasion and avoidance, money laundering, and other criminal activities perpetrated through the misuse of corporate vehicles.

The concealment of corporate ownership information (also called “beneficial ownership”) can be part of international webs used to facilitate tax evasion, money laundering, corruption, financing of terrorist activities, and the proliferation of dangerous goods.

Current Legislation

In support of its national and global tax fairness efforts, the federal government has already developed an extensive network of bilateral tax treaties and tax information exchange agreements with international partners. Furthermore, it has recently passed legislation to adopt the Common Reporting Standard, and signed on to the Organisation for Economic Co-operation and Development (OECD)’s Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting.

However, Canada still has significant blind spots when it comes to knowing the identity of those who own or control a corporation operating in Canada. Addressing this problem requires coordinated action between jurisdictions, given that only 10 per cent of Canadian companies are federally incorporated.

Furthermore, although Canada’s anti-money laundering and anti-terrorist financing laws require that beneficial ownership information be provided by corporations when accessing financial services, requirements under federal, provincial and territorial corporate law for corporations to hold beneficial ownership information remain limited.

Addressing the Blind Spots

In Budget 2016 and Budget 2017, the federal government committed to cracking down on tax evasion and tax avoidance. This includes commitments to further strengthening corporate transparency. The information revealed through the recent leaks of the Panama and Paradise Papers reinforces the need for action.

To address current blind spots, action will be taken to improve the available beneficial ownership information to ensure appropriate authorities have timely access to this information in all jurisdictions.

These actions are part of international efforts in that regard. For example, in the United Kingdom, the names of people who have significant control of companies are now included in a central registry.