Data shows steep ramp up in penalties on companies shifting profits abroad
CALGARY — Life is getting harder for Canadian multinationals trying to reduce taxes by transferring profits abroad.
In its latest budget, the federal government committed to increasing enforcement efforts against companies that improperly shift profits to lower-tax countries by abusing a legal practice known as transfer pricing — but the Canada Revenue Agency has already been cracking down on the abuse for years.
Data released by the CRA under access-to-information legislation shows that the average penalty for improper transfer pricing increased from $3.4 million 2012 to $15.9 million in 2015.
Total penalties, meanwhile, climbed from $58.6 million in 2012 to $478.5 million last year, as both the number of files under review and the size of the disputed transactions have increased.