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View Alain Giguère Profile
NDP (QC)
Thank you very much, Mr. Chair.
The International Consortium of Investigative Journalists (ICIJ) has drawn our attention to one of Bombardier's tax practices. Bombardier received assistance from the accounting firm Ernst & Young. The practice has to do with turning profits of $500 million into a special dividend through a complex transaction.
View Alain Giguère Profile
NDP (QC)
Thank you, Mr. Chair.
At the moment, we are talking about prohibited tax practices and about transferring share value through dividends. That is basically what we are discussing at the moment.
In my opinion, there is a problem with a transaction like this because the justification that the representatives from Luxembourg and from Bombardier came up with is that these fiscal tactics are approved by the federal government.
In one of the tables we were shown, this tax avoidance and aggressive tax planning are expressly prohibited. However, at the moment, we have a clear case of this technique right before our eyes. People are defending it on the pretext that companies see it as a way to handle international competition that is supported and approved by the federal government.
Can anyone explain to me how we can prohibit something and, at the same time, allow it because of the fact that this company is facing international competition?
View Alain Giguère Profile
NDP (QC)
I can even make the case that the American government had to confront these kinds of problems in the UBS cases, the Union des banques suisses and the Société de banque Suisse, where the same system was being used. The American policy was to sanction those two banks severely, to the point of threatening to block their access to American soil.
Could you tell me which way you are going internationally in order to prevent the kind of abuse that you prohibit in Canada?
Brian Ernewein
View Brian Ernewein Profile
Brian Ernewein
2014-12-11 16:47
Thank you, Chair.
I have two comments. First, again trying to stay clear of any discussion of any particular taxpayer's circumstances, I think there is a world of difference between the type of situation that the honourable member raised abstractly in his initial question, and the UBS example he identified near the end. One, as far as we were given to understand, was a matter of clear evasion and it was treated as such. The other was a situation of, or seems to contemplate, an examination of Canadian tax rules in respect of dividends being paid back to Canada from foreign companies operating in countries with which Canada has a tax treaty.
Parliament enacted rules to exempt dividends from active business income from Canadian tax when paid by a foreign subsidiary of a Canadian multinational, and if the question is whether that was the right decision or not, it's a question to return to Parliament. That question is very separate from the challenge of taxpayers who seek to evade taxes in cases such as what we understand the UBS-type case to be.
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