Describe one legal tax avoidance scheme which a Canadian corporation can legally use through Luxemburg.
One of legal tax avoidance scheme used by a Canadian corporation through Luxemburg is transfer of cash. According to information obtained by Radio-Canada newsmagazine Enquête, Bombardier has transferred hundreds of millions of dollars to Luxembourg, a low-tax jurisdiction. Bombardier’s approach is legal and common among multinationals that want to remain competitive internationally. The tax tactics are also approved by the federal government. “Canada has given them permission to do this,” Lareau said. “Unhappily, these strategies are widely used and it's somewhat dismaying seeing the inequality of the tax game that is being played here”. Another interesting point to note is that “all payments made by the Luxembourg-based company are treated as interest payments and thus deductible and subject to low tax rates in the grand duchy. Bombardier in this case, can repatriate the money to Canada in the form of dividends which aren’t taxable because of a tax deal between both Canada and Luxembourg. Companies are able to reduce their taxes by transferring cash, often through a series of shell companies, into Luxembourg. Like most multinationals in Luxembourg, Bombardier has an official office residence, manned by a part-time employee, a few minutes from the capital. Its name is among 87 inscribed in small type on a post-office box. Bombardier responded that its world corporate structure “conforms to all the applicable laws, including the tax laws.” (Luxemburg tax plan, Cbc news).

(2014, December 11th ). Retrieved from: http://www.cbc.ca/news/business/bombardier-among-companies-exposed-for-controversial-luxembourg-tax-plan-1.2867723