Madam Speaker, I appreciate the opportunity to rise and speak to Motion No. 42. This is an important and timely discussion, part of a broader debate, about international tax avoidance that is taking place in Canada and around the world. The idea that all Canadians should pay their fair share of taxes is one our Conservative Party strongly supports. That is why we took a number of important steps in government to combat tax avoidance.

Most significantly, we created the stop international tax evasion program aimed at reducing international tax evasion and avoidance. We are looking forward to working with the new government to continue building on our strong record in this area.

With respect to Motion No. 42, the basic premise behind this motion is the condemnation of tax avoidance practices. Again, the idea that all Canadians should pay their fair share of taxes is one that we support. We do not contest the premise of the motion. However, what we do contest is the method employed in the motion to achieve its purported aim.

The Bloc believes that implementing the motion would result in more money back in the hands of the Government of Canada. In reality, it is not so clear-cut. The motion would nullify the Canada-Barbados Income Tax Agreement Act.

The Canada-Barbados Income Tax Agreement Act was designed to limit double taxation, a situation where the same profits are taxed twice as they are earned in a foreign country and then again when they are remitted to the parent company's country of residence.

Here is how it works in Barbados. Tax payable in Canada shall be deducted from the Barbadian tax payable on such income, profits or gains. In the case of a dividend paid by a company that is a resident of Canada to a company that is a resident of Barbados, which owns at least 10% of the voting power, the credit shall take into account the tax payable in Canada in respect of the profits out of which the dividend was paid.

In Canada, tax payable in Barbados shall be deducted from the Canadian tax payable on such income, profits or gains. For the purpose of computing Canadian tax, a company resident in Canada shall be allowed to deduct, in computing its taxes payable, any dividend received by it out of the exempt surplus of a foreign affiliate resident in Barbados.

Through the allowance of tax credits between particular countries, the international tax burden on companies and investors is effectively minimized. There is a general international tax principle that the country in which immovable property is located should have the right to tax the gains from the disposition of such property.

To successfully operate a foreign affiliate and legally benefit from the low tax rates available, the company must satisfy a set of regulations in place. These include both Canada Revenue Agency's demands as well as the local laws that govern IBCs.

The Canada-Barbados Tax Agreement Act was amended in 2011 to follow in the framework of the OECD treaty models and ensure holding corporations, trusts, or partnerships that held Canadian investments in real property and resource properties would be subject to Canadian taxation on sales of the shares of the holding company or the interests in the partnerships or trusts.

The Conservatives believe that any motion to override the act's provisions should be regarded with skepticism. Why target specifically this act? Undermining an existing act does not seem to be the most appropriate response. Minister Findlay signed the Multilateral Competent Authority Agreement, helping to set the stage for the automatic exchange of financial information with international partners.

Economic action plan 2015 reiterated the Government of Canada's pledge to working with international partners to address international tax evasion and improve tax compliance, including a proposal to adopt the OECD's Common Reporting Standard, starting on July 1, 2017, with the first exchanges of financial account information beginning in 2018.

Canada is one of more than 90 jurisdictions that, to date, have committed to implementing the common reporting standard. The Liberal government is implementing more direct measures to investigate tax evasion.

I will repeat that we highly condemn the practice of tax evasion. However, we disagree that overriding a flexible act set in compliance with international standards is the best way to address the problem.

Phil McColeman

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