CPA Canada white paper clarifies tax evasion and avoidance issues

Identifying ways to lower taxes is a legitimate business effort to reduce costs. Illegal tax evasion, however, is harmful to economies. Chartered Professional Accountants of Canada (CPA Canada) has published a white paper to clarify confusion surrounding tax evasion and tax avoidance.

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A white paper by CPA Canada clarifies confusion in the public debate about tax evasion, tax avoidance and corporate income tax, and its effect on business.

With attitudes and expectations changing both in Canada and internationally, it is important that these issues be addressed. Not only does the white paper provide greater clarity relating to the issues, but it also provides recommendations to help Canada’s corporate tax system work as efficiently as possible.

In the paper we submit that illegal tax evasion is harmful to economies and should be prevented. At the same time, legal tax planning by businesses should be accepted as a means of minimizing expenses, like any other business effort to reduce costs. Corporations should be expected to make legal use of low tax rates or other tax benefits that countries offer to compete for foreign investment.

CPA Canada further submits that there are steps Canada should take to improve the operation of its tax system. These steps include:

  • keeping corporate income tax rates low
  • tightening the focus of specific anti-avoidance rules
  • rethinking the corporate income/consumption tax mix
  • using tax policy to help Canadian businesses compete
  • pursuing more international Tax Information Exchange Agreements

Finally, we believe the government should consult Canadian businesses and tax advisors on the potential benefits that greater tax transparency may offer. Such transparency could come as part of a broader move toward enhanced relationships among taxpayers, tax auditors and tax advisors based on more transparency, cooperation and trust.