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They could do it by loading up the Canadian subsidiary with debt to lower their Canadian bill, which also would give them an advantage in the acquisition process

“If when you are bidding on assets you know you can eliminate the tax on the operation of those assets after the takeover, then you can add an extra dollar on the bid until you have outbid everybody else,” said Mr. Mintz, who sits on the board of directors of Imperial Oil Ltd. “I know that has happened.”

State-owned enterprises could also use transfer pricing mechanisms so that the profits are pushed outside of Canada, putting them outside the reach of government cash collectors.

In the case of liquefied natural gas plants, a foreign company could be purchasing Canadian gas at very low prices and sell it at world leading prices once it leaves Canadian shores. The low Canadian price could keep Western Canadian gas prices depressed, when one of the motivations to build LNG terminals on the West Coast is to raise them.

The Peters report noted that the government may have been concerned in the Petronas case about transfer pricing in deciding to block the deal.

“The majority of the potential value uplift from LNG could be structured in a way to minimize Canadian tax and royalties,” Peters said.

Ownership limits: These could also come into play for companies in strategic sectors such as uranium, potash and oil, industry sources say.

Doug New, a former special advisor to the Foreign Investment Review Agency (now the investment review division of Industry Canada) and currently a Toronto-based partner with Fasken Martineau LLP, noted such a policy was introduced with respect to uranium mines in the early 1980s and the policy remains in effect today.