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Companies That Hurt Canada
A long time opinion that we have held, is how sometimes capitalism runs amok. Companies that move their operations to a tax haven, supposedly for business purposes, but often for the primary reason of avoiding Canadian taxes, are in our opinion doing an immoral thing.
As a matter of principle, when we discover that a company is shielding income in an Income Tax Haven, we rid ourselves of investments in that company.
We think that all investors should take a similar attitude.
These companies that use artificial legal methods to deny Canada that small portion of their income in taxes, are intentional hurting every citizen in Canada.
- Canada has provided them with all the tools to be successful.
- Canada has provided them with a modern infrastructure in which to create and grow their business.
- Canada has provided them with the capital needed to create and grow their business.
- Canada has provided them with modern and efficient stock markets in which they can successfully attract investors and raise capital efficiently and economically.
- Canada has provided them a safe and secure place with full medical coverage, with protections for their employees, with a modern and educated workforce.
Canada and every Canadian citizen enjoys these benefits because if a company is successful, it pays a little bit of its profits in income taxes to Canada. These revenues build our roads, provide our infrastructure, and provide safety and security for our citizens.
Canada Has a Very Low Tax rate
We have many cases of companies either registering in a tax haven, or using legal means to claim that some or all of their operations are in a tax haven and are not subject to Canadian income taxes.
If a company is making profits, which is the primary purpose of being a company, the tax savings of this legal maneuvering to avoid Canadian taxes, seems to us to be very much against the public interest. Often these companies have
- raised their capital on Canadian Stock Exchanges,
- have taken advantage of very low income tax rates in Canada to show how they will make lots of profit and therefore raise their stock prices,
- have taken full advantage of Canadian flexible corporate laws in order to be created and go into the business they are in,
- have used Canadian professionals to guide them to their success, and
- have utilized all the benefits that Canada offers.
Finally Some Action by the Canadian Government
Recently Revenue Canada took some action.
Press Release from Silver Wheaton (which may or may not be guilty of the actions claimed against it)
VANCOUVER, Sept. 24, 2015 /CNW/ – Silver Wheaton Corp. (“Silver Wheaton” or the “Company”) (TSX:SLW) (NYSE:SLW) announces that it has received notices of reassessment from the Canada Revenue Agency (the “CRA”) relating to the Company’s 2005 to 2010 taxation years (the “Relevant Taxation Years”).
The notices of reassessment for the Relevant Taxation Years are consistent with the Proposal received by Silver Wheaton, which was previously announced on July 6, 2015. In issuing the reassessments, the CRA is seeking to increase Silver Wheaton’s income subject to tax in Canada for the Relevant Taxation Years by approximately Cdn$715 million (US$536 million) which would result in federal and provincial tax of Cdn$201 million (US$151 million). In addition, the CRA is seeking to impose transfer pricing penalties of approximately Cdn$72 million (US$54 million) and interest and other penalties of Cdn$81 million (US$60 million) for the Relevant Taxation Years. Total tax, interest and penalties sought by the CRA for the Relevant Taxation Years is Cdn$353 million (US$265 million).
Then investors decided to take action against this possible abuse.
According to the lawsuit, defendants throughout the Class Period issued materially false and misleading statements to investors and/or failed to disclose that: (1) Silver Wheaton’s financial statements contained errors concerning income tax owed from the income generated by its foreign subsidiaries; (2) Silver Wheaton lacked adequate internal controls over its financial reporting; and (3) as a result of the foregoing, Silver Wheaton’s financial statements were materially false and misleading at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages.
This Common Tactic to Avoid Canadian Taxes
Silver Wheaton (if found at fault in these actions) is just one of the many Corporations and individuals that take this immoral tactic. The problem is that many many others have taken this tactic, and somehow, they all think it is fine. It is not fine.
One of our problems is our professionals – our LAWYERS & ACCOUNTANTS – those who devote their careers to assisting people in hiding their income and assets from Canada. They think it is fine to make money by hurting Canada. What an immoral and uncaring attitude.
It is time for the Criminal Code of Canada to recognize that those who counsel these actions, and help perpetrate these actions, be held criminally responsible for them.
Instead of accepting these immoral actions by otherwise good corporate citizens, let us consider these actions immoral. Let’s establish laws that say if you take advantage of Canadian circumstances to raise your wealth, or your capital, you are Canadian and you are subject to Canadian laws and taxes, regardless of the legal b….. created by immoral Lawyers and Accountants.
As Donald Trump says, let`s forget about political correctness, and hold these characters as having committed a shameful act.
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The practice speaks to broader patterns of deception, laziness and general lack of management and board level concern with regards to focusing on the real issue of making money. Instead, these “players” are caught falling into the trap of trying to use “offshoring” and tax avoidance to seemingly strengthen a weak growth performance and outlook.