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A decade ago, a German journalist was approached by an anonymous figure who posed a simple question: “Hello. This is John Doe. Interested in data?” This inquiry heralded one of the most significant leaks in modern financial history, known as the Panama Papers, which came to light in April 2016.
The leaked documents, amounting to over 11 million files from a Panamanian law firm, revealed a vast network of concealed bank accounts, suspicious financial transactions, and the true ownership behind numerous offshore shell companies established in tax havens such as the British Virgin Islands, the Bahamas, and Panama. The implications of this leak were far-reaching, attracting the attention of tax authorities around the globe who recognized the potential for substantial unpaid taxes.
As of now, nearly nine years following the initial revelations of the Panama Papers, around two dozen national tax agencies have reported recovering a combined total of $1.86 billion in tax debts and penalties linked to findings from the leak.
However, the Canada Revenue Agency (CRA) stands apart from these figures. According to its latest releases, the CRA has identified $83 million in taxes and fines attributable to its audits related to the Panama Papers. Yet, the agency does not monitor how much of this amount has been collected, unlike many of its international counterparts.
The overall fiscal consequences of the Panama Papers leak are likely even more substantial than reported, as numerous tax authorities have withheld specific figures, while others, including the CRA, can only specify how much is owed rather than what has been successfully recovered.
This financial assessment stems from the efforts of the International Consortium of Investigative Journalists, which was instrumental in coordinating the initial press coverage of the Panama Papers across 100 media outlets worldwide, including CBC News.
Notably, Sweden has reportedly recouped over $300 million in unpaid taxes since 2021; France has garnered $297 million, while Spanish tax authorities have recovered $250 million from undeclared assets and income.
CRA Audits Ongoing
In Canada, the federal agency claims to have concluded 310 audits on individuals and entities listed in the Panama Papers, with over 130 cases still under review—nearly a decade after the initial leak.
“Completing these audits can take a significant amount of time due to various strategies employed by taxpayers to delay the process, or outright refusal to provide the necessary information, which forces the CRA to resort to alternative methods to retrieve it,” the CRA stated in response to inquiries from La Presse and CBC News. “Additionally, some cases are being contested in court, adding layers of complexity and time to the audits.”
As it stands, there have been no criminal charges filed by the CRA in connection with the Panama Papers. While the agency initiated six criminal investigations, three were closed without action, and the remaining three are still progressing.
“With possibly only three prosecutions across the entirety of Canada, that seems quite inadequate,” commented Jonathan Farrar, a tax accounting professor at Wilfrid Laurier University in Waterloo, Ontario.
Recently, the CRA has increasingly shied away from pursuing criminal cases. The number of criminal charges fell from 33 in the 2019-20 fiscal year to just seven by 2023-24. Similarly, the agency executed 196 search warrants in 2019-20, with a stark decline to 26 in 2022-23 and 59 the following year.
“Rather than delivering a strong message that the CRA is serious about addressing blatant tax avoidance, it appears the impression conveyed is that individuals can easily evade scrutiny,” remarked Farrar.
Quebec’s Assessment Exceeds $40 Million
In a related effort, Revenu Québec has reportedly identified $41.4 million in unpaid taxes linked to the Panama Papers, as of last fall. At least $30 million of this amount has been collected; however, the agency was unable to provide an exact figure on the total recovered.
Both the CRA and Revenu Québec also indicated that they found additional tax liabilities based on revelations from another significant leak, the Paradise Papers, released in November 2017. The CRA has estimated $6.8 million in taxes and penalties stemming from that leak, while Revenu Québec’s findings amount to $16.1 million.
Source
www.cbc.ca