Canada steps up enforcement
October 14, 2009
The high level of trade conducted through multinational companies in Canada means taxpayers there are subject to intense transfer pricing investigations.
Up to 70% of Canada’s international trade is conducted through multinational companies.
The Canada Revenue Agency (CRA) is well known for being aggressive. Canadian companies expect rigorous tax assessments.
In the face of a global recession companies are seeing more audits, disputes with tax authorities and higher penalties as the CRA intensifies enforcement to raise revenue.
The CRA has 440 auditors focusing on transfer pricing matters, a high figure for a relatively small number of multinational corporations. In the US, the Internal Revenue Service, which has a significantly larger number of companies to assess, employs around 450 specialist auditors, although the US has announced plans to increase this number.
Business restructuring to deal with the economic downturn again increases a company’s chance of a transfer-pricing audit. Reduced profits can also lead to tax reviews.
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