The new tax is retroactive and will be applied for the past 7 years, dating back to 2005.
Critics say the "massively distortive" tax grab tells global investors that Canada is no place to do business.
"I have lost count of the number of times that global tax directors have used the words 'banana republic' when I describe this legislation to them," says Michael Firth, a tax partner at PricewaterhouseCoopers Canada, and chief among the critics.
"They don't believe it. They go, 'You're kidding me? Can they really do this?'"
"Like me, many did not take it seriously until December of 2012, always assuming that wiser heads at Revenue and Finance would intervene and fix the problem."
The rules directly affect companies with cross-border transactions that do business with related businesses for reinsurance.
Establishing the owing has also been tricky as there is no consensus on what is taxable and what is not.
Joel Baker, president and CEO of MSA Research Inc said 2012 would cost $200 million alone and with retro-activity, would cost $1 billion. He adds not all companies will be effected and the impact on premiums for consumers remains unclear - although it is certain they can only go up. Don't forget, this will likely effect home insurance, car insurance, life insurance and a slew of other insurance services Canadians rely on. The next increase to these premiums can only be attributed to the Conservative Party.
The insurance industry is hoping Flaherty will save them by June 30 but seeing how it was the Conservatives that introduced the GST and it was in Flaherty's own budget where these tax changes were introduced, along with a slew of other, hidden, tax hikes, they shouldn't get their hopes up.
The Conservative Record on Taxes:1991: 7% GST is introduced.
2006: GST lowered to 6%
Income Trusts taxed despite promises not to tax it
2008: GST lowered to 5%
2010: GST expanded to insurance industry among others
2011: Conservatives raise EI Premiums, essentially taxing job creation
2013: Import tariffs raised, raising prices at the store on virtually everything