A tax bill passed by the Canadian government that would increase its powers to tackle international tax avoidance has received the royal assent and can become law.
The legislation named An Act to implement a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting, was fully approved on 21 June 2019.
It will allow Canada to modify any bilateral tax treaties with other countries to include measures that are in line with the Organisation for Economic Co-operation and Development’s recommendations, without having to fully renegotiate them.
“Our government is committed to building an economy that helps people and businesses get ahead. To do that, we need a tax system that is effective and fair,” said Bill Morneau, Canada’s minister of finance.
“The [bill] will help us build on actions we’ve already taken to enhance the integrity of Canada’ s tax system — both at home and abroad — and give Canadians greater confidence that the system is working in their best interest.”
In addition to passing the piece of legislation, the Canadian government is creating a task force and expanding law enforcement’s operational capacity to tackle anti-money laundering and counter-terrorist financing (AML/CTF) issues.
These will include:
- Creating the Anti-Money Laundering Action, Coordination and Enforcement Team, which will bring together dedicated experts from across intelligence and law enforcement agencies to identify and address significant money laundering and financial crime threats,
- Creating a multi-disciplinary Trade Fraud and Trade-Based Money Laundering Centre of Expertise to strengthen capacity at the Canada Border Services Agency and the Financial Transactions and Reports Analysis Centre of Canada (Fintrac) to target these growing threats, and;
- Strengthening operational capacity at Fintrac, Canada’s AML/CTF regulator and financial intelligence unit.
The move was also underpinned by the country’s growing tax gap, Diane Lebouthillier, minister of national revenue said.
“Our Government is committed to cracking down on tax evasion and aggressive tax avoidance, in Canada and offshore.
“The government is delivering on its commitment to calculate the tax gap. This information will help the Canada Revenue Agency evaluate its approaches and better target compliance actions to ensure a tax system that is fair and equitable for all Canadians.”