Foreign direct investment seems to be the manner in which businesses in Canada are looking to maximize their profits by cutting short on taxes. And all of this through legal processes, though the act of evading tax is illegal.


New Statistics Canada figures dealing with the country’s direct foreign investment suggest that Canadian corporations have been pumping in billions more dollars into tax havens abroad. These figures were interpreted by Canadians for Tax Fairness, which revealed that over $270 billion was deposited in 2015 by Canadian corporations in the top 10 tax havens that are the favorites for Canadian capital. This was a 17% increase from the figures of 2014.


Barbados Topmost Among Destinations


Among these top 10 destinations Barbados was the foremost, attracting 14% more investment than in 2014 with $79.9 billion. The other four countries in the top 10 that saw annual increases were:


  • Cayman Islands
  • Bermuda
  • Switzerland
  • Hong Kong


Each of these nations witnessed year-over-year increases amounting to at least 34% in 2015. According to Canadians for Tax Fairness, these companies were actually using legal measures to channel investment through these tax havens so they could avoid paying taxes in Canada for the profits they earn. These figures do not involve the income individual Canadians have stacked offshore, which amounts to billions of dollars as well.


Canada’s Initiative to Capture Tax Evasion


But Canada could soon be putting an end to this. Canadians for Tax Fairness reports that the Finance Minister has set apart close to $90 million a year for fighting tax evasion, which would total $444 in a period of five years. Another $351 million has been set apart over five years for improving the capability for collecting taxes owed by companies that find all kinds of ways to defer these tax payments. The move is an indication of the government’s plan to catch up on the money it is losing to Canadian multinational companies and wealthy Canadians. The budget set apart by the government should enable it to collect around $10 billion from these investments stacked up in tax havens.


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