The official opposition in the National Assembly is demanding accountability from the government for its subsidies to companies that use tax havens. Its spokesperson for public finances thinks that companies benefiting from financial assistance from Quebec should “commit not to use tax avoidance strategies”.
“You have to be careful: it’s public money,” says liberal MP Monsef Derraji.
His party was thus reacting to an investigation carried out jointly by La Presse and Radio-Canada on the Montreal company Pharmascience, based on documents obtained by the International Consortium of Investigative Journalists (ICIJ) following a new leak called Cyprus Confidential. The documents reveal how the Montreal generic drug producer used Cyprus and Barbados to avoid paying millions of dollars in taxes in Canada.
For years, the company has received significant public aid, such as grants and loans totaling nearly 55 million announced at the end of October for the expansion of its injectable products factory in Candiac.
A portion of the aid, a “non-repayable loan” (grant) of 24.7 million, comes from Investissement Québec. In a joint statement with the Minister of Finance, the office of Minister of the Economy Pierre Fitzgibbon underlines that the financial arm of the government verifies “the structure of the company to know the subsidiaries located outside Quebec”.
Questioned on this subject, Mr. St-Amand did not specifically specify whether Investissement Québec knew of the existence of the Pharmascience subsidiary in Barbados, which existed until 2019.
The joint statement also said that the IRS “has significantly increased its investigative and recovery capabilities in recent years.” “Between 2020 and 2022, Revenu Québec contributed more than $1 billion in unpaid taxes thanks to its strategy to strengthen the fight against aggressive tax planning and the use of tax havens. »
The opposition nevertheless calls on the government to do more.
“Clearly, what Pharmascience uses is a modus operandi to maximize its revenues, use taxpayer money and tax credits in Quebec and Canada and install patents in Barbados,” says Monsef Derraji. It’s a financial structure where the company is comfortable, he said. Well, if you’re comfortable with that, why are you coming to beg the government? »
He intends to present an initiative mandate on tax havens to the Public Finance Committee, in reaction to our investigation.
In 2016, representatives of the Coalition Avenir Québec voted with other deputies in the National Assembly in favor of a resolution condemning “practices linked to tax havens, which deprive the Quebec state of considerable sums and violate the principle of tax fairness.”
The text notably called on Ottawa and Quebec to collaborate to “put an end to the tax avoidance which is practiced through the numerous empty shells in Barbados set up by Canadian companies”.
Pharmascience transferred millions in revenue to this Caribbean island from 2013 to 2020.
Québec solidaire and the Parti Québécois are also asking the government to deprive companies that use tax havens of subsidies.
“Every time a taxpayer evades their tax responsibilities, it affects the burden of other taxpayers and the state’s ability to provide services,” says Haroun Bouazzi, finance spokesperson for Québec solidaire.
The leader of the Parti Québécois, Paul St-Pierre Plamondon, thinks that the government “must strengthen the laws in order to make tax avoidance more complex, if not impossible.”
In Ottawa, the Bloc Québécois is in the same boat. “We transfer profits to tax havens, and an accounting firm says: ‘It’s completely legal,’ even if it’s completely immoral,” says Gabriel Ste-Marie, spokesperson for the group in matters of finance.
At the New Democratic Party, deputy leader Alexandre Boulerice, however, is more nuanced.
“My first instinct is to say, ‘Of course, there should be no more subsidies to companies that use these schemes,’” he says. But maybe that would affect too many companies! First and foremost, they must no longer be able to benefit from these practices, which have been legalized. »
According to him, “Justin Trudeau’s Liberals were never there to fight this “legalized scam”.”
