BMO's Bermuda subsidiary hoped to avoid tax obligations by letting 'times run out'

Thursday, 09 November 2017, 05:27:59 PM. The Paradise Papers leak has provided an unprecedented look at the offshore manoeuvrings of a big Canadian bank, including what senior BMO executives fretted about behind closed doors as they ran a subsidiary based in a tax haven.
It was a blustery, grey day in Bermuda, and a clutch of Bank of Montreal executives who had flown in were huddled in a board room. Top of the agenda for the March 2013 meeting: how to lessen the burden of flying six executives to the palm-fringed island a couple times a year — the bare bones required for tax purposes to officially keep a subsidiary there with no staff, no desks, no phones and no premises. Two years earlier, BMO had acquired Lloyd George Management, an investment firm focused on Asia. LGM, as it's known, had most of its staff at two subsidiaries in Hong Kong and London. But its parent company was incorporated in zero-tax Bermuda — despite having nothing more there than a mailbox at a law firm specializing in offshore financial services. BMO ran $288M 'abusive' tax dodge: CRA To keep up the legal appearance of the company's Bermuda residency, a majority of LGM's board of directors — made up mostly of BMO senior managers — had to meet in person on the island at least twice a year. If not, there would be a risk the company could be deemed to reside elsewhere, possibly in Canada, where it may have to pay tax.   And there was the catch: It was proving tough to get enough people to jet down to Bermuda for the board meetings, according to the BMO executive chairing the gathering. "We were having trouble getting six people to attend the meeting every time in Bermuda," said the executive, Barry Cooper, according to a transcript of the meeting. The solution? They cut...Read more
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