CNN’s Tracee Carrasco has a guide to these documents, as well as why they appear to have piqued interest in Canada.
Which companies are named?
Apple, Amazon, Google, Starbucks, Facebook, Facebook, General Electric, Starbucks, Amazon, Coca-Cola, McDonalds, PepsiCo, Wal-Mart, Microsoft, Procter & Gamble, Netflix, Cigna, Alphabet, Sunoco, Delta Air Lines, Norfolk Southern, Glencore, General Electric, Royal Dutch Shell, ExxonMobil, Vodafone, Dow Chemical, Chevron, Philips, Rio Tinto, Glencore, JPMorgan Chase, Bank of America, JPMorgan Chase.
What’s the cause?
The leak appears to show how multinational corporations abuse special rules in the U.S. tax code to funnel profits away from the taxman.
Researchers believe the WikiLeaks release could be linked to a whistleblower in Iceland. An employee who had access to the leaked documents inside Iceland’s tax office reportedly had concerns over the country’s $72 billion offshore cash holdings.
What effect is it expected to have?
Most experts agree that the leak could be a wake-up call to corporate decision-makers over where their companies’ money should be parked.
“If you don’t deal with tax issues…then people are always running for the door,” said Peter Cornelius, an emeritus professor of economics at the University of South Australia.
A special legislative session called by South Korea in 2015 where lawmakers demanded the government clamp down on offshore corporate tax evasion drew some global attention to the issue.
How are Canadians involved?
Canadians could also be affected by this leak. Canadians with the same citizenship in the tax havens are referred to as “pensioners” when disclosing to the IRS, and it’s widely believed that several hundred of Canadians living in such tax havens have surrendered their citizenship and created permanent residence in order to avoid U.S. taxes.
This leak may raise a public outcry at a time when Canada is looking to take a more aggressive stance in cracking down on tax dodging. In early November, Canadian Prime Minister Justin Trudeau called on American authorities to get more serious about clamping down on tax evaders and illegal trading.
And yet, Canada has taken a softer approach to tax evasion than some other tax havens. In October, U.S. Justice Department officials announced that the Canadian crown corporation Telus had made an “ultra-low-tax pact” with the IRS in 2017. The disclosure means that the company agreed to voluntarily amend its taxes for a “period of time.”
Since then, just before Trudeau’s November speech, it was revealed that Canada is not charging any offshore tax scofflaws, despite public demand for tougher action.
In May, he said Canada was making a distinction between “aggressive” avoidance by multinational corporations and “sophisticated” tax planning by individuals who move their income overseas.
“If we are more aggressive in our tax policies, Canada could boost GDP by nearly $50 billion a year or nearly 10% to 12.5% of GDP,” according to a report released this month by the Canadian Centre for Policy Alternatives.
What else are these papers referring to?
Research around tax haven secrecy will likely be the most prolific volume of this leak.
According to the Business and Tax Policy Centre’s Global Tax Justice Index, places with the most offshore tax havens are also the worst performers in the index. Iceland, Cyprus, the Cayman Islands, Switzerland, Luxembourg, and Bermuda have taken top spots in this index for years.
Although Iceland was the first country to face legal scrutiny for offshore tax evasion in 2000, an average of six countries listed at the top of the global ranking have been in the news in the last 14 years.
More to come?
According to historian Steve Hildebrand, “these practices start with a set of rules that, if they are loosely enforced, will make it difficult to police these practices. So when that starts, what do you do about it? This issue now has kicked up the political stakes.”