On September 21, 2016 the International Consortium of Investigative Journalists (ICIJ), the same organization that released the “Panama Papers” in April 2016, released the Offshore Leaks Database, an online collection of records and documents that include details on offshore company directors and owners in the Bahamas that the ICIJ imply are involved in aggressive tax planning, tax evasion, and tax haven secrecy.
The database houses 1.3 million files from the Bahamas’ corporate registry and includes the names of directors and some owners of more than 175,000 Bahamian companies, trusts and foundations registered between 1990 and early 2016.1 The leaked Bahamian files reveal prime ministers, cabinet ministers, princes, convicted felons, and others; involved in offshore corporate activities linked to 200 countries and territories.2
It is not illegal to set up an offshore shell company. There are legitimate business reasons for setting up an offshore structure. However, transparency in tax planning has become essential to tax authorities around the world, and full transparency of offshore corporate activity should be part of a company’s reporting and compliance procedures.
Canadian resident taxpayers are permitted to invest in entities resident in tax haven countries and may have various bona fide tax planning reasons for doing so. Canadian resident taxpayers are required under the Income Tax Act to report foreign holdings worth more than $100,000 to the CRA (see Form T1135). Failure to do so may result in significant penalties. The CRA’s efforts to fight international tax evasion and aggressive tax avoidance includes the Offshore Tax Informant Program (OTIP), which allows the CRA to award individuals financially for providing information related to major international tax non-compliance that leads to the collection of taxes owing.
To explore the Offshore Leaks Database, go to https://offshoreleaks.icij.org/
1 The Offshore Leaks Database also houses the Panama Papers leaked documents from April 2016 to combine almost 500,000 offshore companies’ documents. International Consortium of Investigative Journalists , “Former EU Official Among Politicians Named in New Leak of Offshore Files from The Bahamas,” September 21, 2016, online at: https://www.icij.org/offshore/former-eu-official-among-politicians-named-new-leak-offshore-files-bahamas?utm_source=Watchdog&utm_campaign=314601c8b9-160921_Bahamas_Launch_Email&utm_medium=email&utm_term=0_ffd1d0160d-314601c8b9-102318885&mc_cid=314601c8b9&mc_eid=8ebf3c8081
2 International Consortium of Investigative Journalists , “ICIJ publishes leaked Bahamas info to offshore database,” September 21, 2016, online at: https://www.icij.org/blog/2016/09/icij-publishes-leaked-bahamas-info-offshore-database