KPMG’s Appearance before Canada’s Parliamentary | KPMG | CA

KPMG’s Appearance before Canada’s Parliamentary Finance Committee

KPMG’s Appearance before Canada’s Parliamentary

KPMG Canada today testified before the Parliamentary Finance Committee in Ottawa.

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KPMG’s Appearance before Canada’s Parliamentary Finance Committee

Greg Wiebe, KPMG’s former Global Head of Tax appeared on KPMG’s behalf to answer questions and provide commentary on the industry, the firm and its rules and regulations to manage best practices. KPMG presented the following prepared remarks.

Good morning, Mr. Chair.

Thank you for the invitation to appear before this Committee. 

I have been with KPMG Canada for over thirty years, and recently completed a term as the KPMG International Global Head of Tax.  Before that, I was the Managing Partner of KPMG Canada’s tax practice and before that, led the tax practices in Vancouver, Calgary and in my hometown Winnipeg. 

We welcome this opportunity to help bring clarity and understanding to a number of issues that are important to all of us as Canadians, and particularly the accounting profession – including our firm, KPMG.

KPMG is an active member of CPA Canada, the body that sets and enforces the standards for more than 200,000 accountants in Canada.

Every day, accountants across the country help their clients with all sorts of financial issues - including helping them comply with the myriad of complex tax rules.

Our firm has been serving Canadians for close to 150 years.  Over those years, we have continually evolved our practices to meet the changing needs and expectations of our clients and society as a whole – a fact which is critical to this discussion.

Tax planning is an accepted part of our tax system.  As the Supreme Court of Canada explained in 2013, and I quote: “Every taxpayer is entitled to order his or her affairs so that the tax payable is less than it otherwise would be.  Taxpayers often engage in tax planning to achieve this result.”1 end of quote.

With that in mind, the Isle of Man tax plan, which has been the subject of much discussion and media attention in recent months, was created in 1999 and hasn’t been implemented for close to ten years. 

To understand the facts around this particular plan, we need to try to put ourselves back to that environment 17 years ago. Simply put, we can’t take a 2016 lens to look at a 1999 issue.

In the late 1990’s, the approach to tax planning in our profession and society as a whole was different than it is today, both in Canada and around the world. 

The fact is, the late 1990’s was a time when non-resident trusts were permitted under Canadian law as a matter of government policy. In fact, they were encouraged by the Federal government as a way for immigrants with financial means to come to Canada while keeping some of their funds abroad.

It was in this environment in 1999 that this tax plan was created.

As is the case with all of our tax plans, it fully complied with all applicable tax laws.  We conducted extensive internal and external due diligence, including going so far as to obtain independent legal opinions from leading tax experts – both in Canada and in the Isle of Man.

With this diligence in hand, we implemented this plan 16 times, of which 13 are known to the tax authorities. We haven’t used one of these plans in almost a decade.

If we now roll the conversation forward to 2016, the world has changed for every business, including the accounting profession.

And so, we, too, have modified our business practices to meet the expectations of our people, our clients and our communities.

For example, KPMG strongly supports and was proud to have been involved in the OECD/G20 Base Erosion and Profit Shifting Initiative designed to allow jurisdictions to work together to lay the foundations of a modern international tax framework.

Further, we ceased offering the tax plan to clients many years ago because both our tax practice and the national and global context changed regarding acceptable tax planning. 

And we have done more.

  • By 2006, any significant tax plan required a review by independent partner committees regarding the General Anti-Avoidance Rule, Transactional Tax matters, Risk and Reputation and other areas deemed appropriate by our professional standards. 
  • In 2009, we developed and deployed a Global Tax Code of Conduct – a document that sets forth the commitments we make every day to our people, our clients, tax authorities and our communities. It spells out our responsibilities as individuals and as leaders, and requires us to act as role models, promoting ethical behaviour and ensuring that our own actions serve to reflect our values.

Like every business, we have changed dramatically since 1999.  One area where we have not changed, however, is the importance that we place on client confidentiality. 

Client confidentiality is not just a KPMG issue – it is a cornerstone of the accounting profession.  We have a legal and professional obligation to keep client information confidential.  As all of you can appreciate, if Canadians could not trust their accountants to keep their private business affairs private, there would be no accounting advice. 

Client confidentiality is a key issue at stake in this debate.  In 2013, the CRA applied to the Federal Court to require us to disclose the names of all of our clients who used this tax plan. 

We opposed that order on principled, legal grounds because of the precedent it sets around client confidentiality and the impact that precedent would have on our entire profession. The existence of this ongoing litigation has resulted in us being limited in what we can and cannot discuss publicly, which in turn has led to an unfortunate imbalance in the depiction of our firm in the media. But as inconvenient as it is for us, the principle is too important to the profession to forgo.

I’d like to conclude my remarks by talking about our team.

KPMG employs 6,400 employees in 40 offices from Victoria to St. John’s.

Globally, the KPMG network employs 175,000 people in 155 countries.

Our people in Canada and around the world come to work every day to help our clients with the business challenges they face:

  • We help small business owners meet their payroll.
  • We help Canadian businesses grow, expand and be successful internationally.
  • We help protect Canadian investors through our audit services. 
  • We help Canadians meet their tax obligations. 
  • And finally we help our communities prosper by volunteering our time and expertise. 

Our people do all of this while living by the values of our organization.

One value stands out from the rest – “Above all, we act with integrity”, including most importantly acting within the law.

What is being portrayed in the media is not who we are.  It is not what we stand for.

We are incredibly proud of our team and the difference each of them make to each other, our clients and their communities every day. 

Every member of our team is committed to and supportive of the continued evolution of our world to a place where there is more trust in the role of government, the role of the accounting profession, and confidence by society in the fairness of the tax system, both in Canada and globally.

We appreciate this opportunity to provide context and contribute to this ongoing discussion.  

Thank you, Mr. Chair.

About KPMG

KPMG LLP, an Audit, Tax and Advisory firm (kpmg.ca) and a Canadian limited liability partnership established under the laws of Ontario, is the Canadian member firm of KPMG International Cooperative (“KPMG International”). KPMG member firms around the world have 175,000 professionals, in 155 countries.

The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss entity. Each KPMG firm is a legally distinct and separate entity, and describes itself as such.

CONTACT

Julie Bellissimo

National Manager, Communications

KPMG in Canada

416.777.3988

juliebellissimo@kpmg.ca

 

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