Federal-Provincial agreement on corporate ownership transparency only a first step | National Union of Public and General Employees

Federal-Provincial agreement on corporate ownership transparency only a first step

Successive federal governments have talked tough on crime, terrorism and tax avoidance, while doing nothing to change weak rules about transparency for corporate ownership that facilitated those activities. While more is needed, it is encouraging to see governments recognizing the need to shut down the snow haven.

Ottawa (11 Jan 2018) — At the meeting of federal, provincial and territorial finance ministers last month the discussion about taxing cannabis received most of the attention. However, the most important thing to come out of the meeting may end up being the agreement to bring in tougher requirements for reporting who really owns or controls companies registered in Canada. But according to organizations who have worked on the issue for many years, what was agreed to in December is still not enough to stop Canada from being a haven for those engaged in money laundering, tax evasion or other criminal activities.

Canada a “snow haven” for tax avoiders, money launderers

Companies registered in Canada don’t have to disclose as much information about who owns or controls them (referred to as beneficial ownership), as they would if registered in other countries. As a piece in the Toronto Star on the Panama Papers shows, those helping the wealthy and large corporations avoid taxes are taking advantage of this.

Weak Canadian rules on disclosing corporate ownership aren’t being used just by wealthy individuals and corporations wanting to avoid taxes. They are also being used by those engaged in other criminal activities. A federal government risk assessment of existing rules “identified Canadian corporations and trusts as highly vulnerable to money laundering and terrorist financing.”

Successive federal governments have talked tough on crime, terrorism and tax avoidance, while doing nothing to change weak rules about transparency for corporate ownership that facilitated those activities. While more is needed, it is encouraging to see governments recognizing the need to shut down the snow haven.

Information on corporate ownership must be public to be effective

Canadians for Tax Fairness, Publish What You Pay Canada, and Transparency International Canada have all done extensive work on corporate ownership transparency. While they are happy that finance ministers are committed to taking action, they are concerned that without a public ownership registry, those actions won’t be enough.

Instead they are encouraging federal, provincial and territorial governments to follow the lead of other countries and create a public ownership registry. Because it would be accessible to journalists and organizations working on issues like tax fairness or income inequality, a public registry means more scrutiny. Given the importance of secrecy for tax avoidance, money laundering and funding terrorism, that additional scrutiny is essential to the success of tougher requirements around corporate ownership transparency.

The 3 organization made 2 key recommendations that need to be incorporated into a plans for corporate ownership transparency:

  • Requiring companies and trusts to disclose beneficial owners to provincial, territorial and federal corporate registries and then compiling this data on a national public searchable database that would facilitate access on behalf of law enforcement, financial institutions, civil society, and journalists.
  • Creating a common reporting standard in which the federal government, provinces, and territories can collect the same information to facilitate sharing.

Corporate ownership transparency an important tool in fight for fairer society

Making it harder for wealthy corporations and individuals to avoid taxes and making it easier to fight crimes like money laundering are only some of the benefits for working people that will result from making information about who owns companies accessible to the public. Whether it's workers looking for information about their employer to help them negotiate a fair contract or community groups trying for hold corporations responsible for environmental problems, knowing who owns a company can make a huge difference.

Federal, provincial and territorial governments need to listen to those who have done extensive work on the issue of corporate ownership transparency and ensure that information is publicly available.


NUPGE

The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 390,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. — NUPGE

 

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