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The majority of Canadians named in the Panama Papers tax evasion scandal in 2016 had paid their owed taxes, according to an official with the Canada Revenue Agency (CRA).
Cathy Hawara, assistant revenue commissioner of the Compliance Programs Branch of CRA, provided testimony on potential tax revenue loss resulting from non-compliance and tax evasion before the Standing Senate Committee on National Finance on April 26.
Senators asked questions about the 2016 Panama scandal in which approximately 11 million files with information on offshore bank account holders were leaked from the office of Panama law firm Mossack Fonseca to the German newspaper Süddeutsche Zeitung.
The committee heard how the disclosure caused a global scandal and included high-profile politicians, athletes, celebrities, and mobsters. At the time, CRA went to Federal Court to force Canadian bankers to disclose accounts of depositors named in the Panama Papers, according to Blacklock’s Reporter on April 28.
Testifying before the committee, Hawara said, “We opened five criminal investigations in relation to taxpayers linked to the Panama Papers. Three investigations have been closed, and two are still ongoing.”
The federal government initially said 2,600 files related to Canadian taxpayers were being investigated by auditors, according to Blacklock’s Reporter on April 28. Hawara told the committee that 900 Canadian individuals, corporations, and trusts were identified in the government’s review of the papers.
“In the end, 65% of the Canadians who were identified in the Panama Papers were found to be compliant,” said Hawara. “They had met their tax obligations, so it is important to remember that just because a Canadian individual or company has their name in a leak, it doesn’t necessarily mean that they have not met their tax obligations.”
She told the committee that the federal government has closed 280 audits in relation to the subject and assessed $77 million in taxes and penalties from those investigations as of December 2022.
“I don’t have more up-to-date statistics, unfortunately. We have 140 audits still underway. This is also information that we release publicly on our website, and we will continue to provide updates on our efforts in relation to all of the leaks,” she said.
The CRA has a number of proposed measures “to address aggressive tax avoidance and tax evasion,” Hawara testified. As an example, she cited CRA’s request of $25 million in federal funding “to expand our capacity for our criminal investigations program, and an associated $2.7 million for the Public Prosecution Service of Canada.”
In government affidavits filed in Federal Court at the time, auditors said they relied on media reports to investigate and track Panama Papers clients.
“I rely on media reports throughout my affidavit and I believe these media reports to be true,” said one 2016 affidavit by CRA auditor Rachid Fizazi.
In the CRA’s 2022 Overall Federal Tax Gap report, the government set the value of unpaid taxes at up to $40.4 billion annually, including $4.2 billion lost to offshore transfers.
“Eliminating the potential tax loss from offshore activities can be difficult,” the report said.