IRS finds tax avoidance messages between Sirius XM CEO and Canadian officials

A researcher at the Institute for Fiscal Studies and Democracy at the University of Ottawa has uncovered emails from a top executive at Sirius XM Radio who discuss negotiating with a Canadian government official…

IRS finds tax avoidance messages between Sirius XM CEO and Canadian officials

A researcher at the Institute for Fiscal Studies and Democracy at the University of Ottawa has uncovered emails from a top executive at Sirius XM Radio who discuss negotiating with a Canadian government official over a tax arrangement with the Cayman Islands.

The correspondence between Sirius’ parent company, Liberty Media, and George Cope, the chief executive of the company, were shared with several news organizations, including the National Post and The Wall Street Journal.

You can read them in full on a site set up by tax lawyer Avery Donohue, or at Google Drive.

They have been reproduced below, but be aware that some of the words in the emails are similar, or are misspelled, in many of the documents.

The emails detail discussions between Liberty CEO Cope and several Canadian officials regarding the company’s tax arrangements. Their correspondence is below.

Global Affairs officials say Liberty has not given them “any financial information” in response to their questions, and that they cannot compel the company to turn over information. The official did not reveal what question Global Affairs has in mind.

Global Affairs can only share information with the Canadian Securities Administrators if it’s needed for a stock-related case, so the issue is being handled by the Canadian Securities Administrators, a commission set up in 2010 to oversee the Canadian capital markets.

The commission did not respond to requests for comment.

Liberty owns Sirius XM Canada, a satellite radio company that operates as Sirius XM Canada Satellite Services Ltd. in Canada. It is not clear from the exchange between Cope and Global Affairs whether Sirius XM is a global concern, and whether its tax status in the Cayman Islands poses any other challenges to Canada.

An online search of these documents reveals extensive discussions among Liberty executives about tax matters.

Liberty’s CFO, Mark Mays, for example, told another person in the chain of emails that the company believed in “an ‘all stakeholders’ tax strategy.” While Liberty won’t enter negotiations with Canadian officials over the Cayman Islands, Cope believed it “could build a moat to protect us from [sic] competition here.”

Since the emails were made public, Global Affairs has not issued a comment on the matter. Canadian authorities are required to collect information from corporations in terms of their tax history, but Liberty and its executives have not been found to have violated any laws in Canada.

This does not, however, mean that Canada has offered Liberty a safe haven. Canada is one of five countries in the G7 that has filed formal complaints about Bermuda — along with the U.S., Japan, Canada and Germany — for concealing its tax treatment of the industry that includes the tax shelter for media companies like Sirius XM.

Though the Cayman Islands aren’t all that popular with European economies, the country has become a popular tax haven for U.S. media companies, including movie producer Imax and satellite TV network Dish Network, both of which are incorporated in Bermuda. A 2013 Senate study found that companies based in Bermuda had received approximately $1.8 billion in state and local tax rebates in 2009 for five years.

Liberty has since sought to reassure investors about its tax practices, promising in a statement on its website that it “will comply with all applicable laws in all jurisdictions it operates in.”

Sirius XM has paid a relatively low rate of taxes for years, though the issue has not been the issue in this particular case. The company has previously described the tax filing on a document it prepared and presented to investors as “incomplete.”

PaidContent.org wrote on Friday that Cope’s emails aren’t “significantly different” from hundreds of similar exchanges between U.S. executives and tax authorities. But Monday, The Wall Street Journal ran an article titled “World’s Favourite Tax Haven’s Role in Media a Mystery.”

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