Canada vows to curb tax dodgers amid KPMG offshore scandal

Canadian prime minister Justin Trudeau has vowed to do a “better job” tackling tax evasion and tax avoidance following a high-profile exposé into how wealthy individuals used an Isle of Man-linked offshore scheme to avoid paying C$130m (£79m, $97m, €91m) in taxes, reports International Adviser.

"It is absolutely unacceptable that there be people not paying their fair share of taxes,” said Trudeau, according to Canada’s CBC News.

The prime minister added his government has put C$440m into the Canada Revenue Agency "to ensure we are doing a better job of […] going out and getting tax avoiders and tax fraudsters".

"We know that there is always more work to do, but it's something we continue to take very, very seriously.

"We know Canadians want to make sure that people are paying their fair share of taxes."

KPMG offshore tax scheme

Last week, an investigation by CBC News and Radio-Canada revealed the names of 21 wealthy Canadians with links to shell companies set up by accountancy firm KPMG on the Isle of Man.

According to the media outlets, KPMG solicited Canadians with a "minimum" of C$5m to invest in an "offshore company structure”, which cost C$100,000 to set up and guaranteed confidentiality.

Canadians using the scheme claimed they were "gifting" their money to an offshore jurisdiction. In reality, the money would be invested and any returns would be "gifted" back so the returns were all tax-free.

The findings come as KPMG has been fighting a judge's order since early 2013 to hand over the names of the wealthy clients involved in the controversial scheme, which ran between 1999 and 2012.

'Sweetheart deals'

In 2012, the Canada Revenue Agency (CRA) launched its own probe into the arrangement, which KPMG has consistently defended as compliant with Canadian laws.

However, the CRA later described the arrangement as a "sham".

Last year, the Canadian government also launched a parliamentary committee inquiry into the scandal after the CRA was accused of offering ‘sweetheart deals’ to the wealthy who used the KPMG scheme to avoid paying tax.

The agency's offer came with a strict condition that clients never talk about it in public.

The amnesty offer, leaked to CBC News, granted KPMG clients "no penalties" as long as they paid back taxes and modest interest.

However, the inquiry itself, which was cut short last May, has come under fire for letting KPMG “off the hook” after the accountancy firm faced no further action.

Following CBC's revelations, there are now fresh calls to launch a new parlimentary inquiry into the scheme.

In a written statement in response to CBC' story, KPMG said the firm was "prevented from discussing specific client matters."

The firm also said the tax structure implemented in the Isle of Man "was very carefully developed and reviewed" and was also backed by "opinions of external counsel in Canada and the Isle of Man, to ensure that it complied with the laws of both jurisdictions."

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