COUNTRY OVERVIEW

Canada is the world’s second largest country, with an area of 9,984,670 sq. km, of which 891,163 sq. km is inland water. Canada shares unfortified borders with the contiguous United States to the south and US state of Alaska to the north-west.

In June 2019, the population of Canada is estimated to be 37.4 million. English  and French are the official languages, though English predominates.

The head of state is the British monarch, Queen Elizabeth II, who is represented by the governor general. The country’s parliament consists of the Senate (with members appointed by the governor general under the advice of the serving prime minister) and the House of Commons, members of which are elected by popular vote to serve a maximum of five years. The leader of the majority party in the House of Commons is automatically designated as the country’s prime minister. The current Prime Minister is Stephen Harper.

Canada’s economic and technological development has been spurred by its close trade ties with the USA, which purchases around 80% of Canada’s exports. In 2011, services accounted for 70% of the economy, with industry accounting for 28.5%, and agriculture just under 2% of gross domestic product (GDP). The currency is the Canadian dollar (C$).

Telecommunications services are excellent and modern. There are 26 major airports, and the country has one of the world’s largest rail networks. Ports and terminals operating in Canada include Fraser River Port, Halifax, Hamilton, Montreal, Port-Cartier, Quebec City, St John (New Brunswick), Sept-Isles and Vancouver.

Corporation tax rates vary depending on the territories and provinces in which the business operates. The effective federal rate is 28%. Income tax rates range from 15% to 33%, depending on the various tax rate thresholds; there are also provincial/territorial personal income taxes. Capital gains are generally subject to income tax on 50% of the gain.

Tax privileged business sectors include, at provincial/territorial level, farming, mining, forestry, oil and gas exploration, and venture capital funds. At the federal level, tax credits are available for film and video production, and for research and development carried out in Canada. Some provinces/territories have enterprise zones that offer incentives to certain businesses, mainly in the form of property tax abatement.

  • Country: Canada
  • Region: Americas
  • Currency: Canadian Dollar (CAD) (C$)
  • Languages: English, French
  • Time Zone: UTC -3.5 to -8
  • Phone Code: +1
  • Communications: Very Good
  • Capital primary business districts: Ottawa, Toronto
  • Good Relationships: Bahamas, Barbados, Bermuda, United Arab Emirates, United Kingdom, United States
  • Bad Relationships: Burma, Cuba, Iran, Korea (Democratic People’s Republic of), Libya, Somalia, Sudan, Syria

BUSINESS ADVANTAGES

  • Canada has a welcoming business environment, and is one of the smoothest countries in the world to conduct business in.
  • Canada has a large area, occupies a strategic location, and is a member of the major international and intergovernmental organizations of the world like the G7, the G20, the United Nations (UN), the Organisation for Economic Co-operation and Development (OECD), the North Atlantic Treaty Organization (NATO), and the North American Free Trade Agreement (NAFTA). Consequently, it wields a remarkable access in terms of market access.
  • Canada is one of the most cosmopolitan countries in the world, with world-class universities, a universal health care system and clean and friendly towns. It is one of the best countries in terms of quality of life.
  • Canada’s banking system is considered robust and business-friendly. International transactions and banking are highly developed in Canada.
  • Canada has a highly educated, English-speaking workforce, so procuring human resources is very convenient here.
  • Canada has signed over a dozen free trade agreements with most of the developed and developing countries – so companies registered in Canada benefit from tax advantages and market access that come along with these accords.
  • Canada has double taxation avoidance treaties with nearly 100 countries including the United States, Singapore, Germany, France, India, Russia and the United Arab Emirates. These lead to a minimization in the withholding tax payable by a Canadian business.
  • To start a business in Canada, just 1 director and 1 shareholder are required. Also, there is no restriction on their respective nationalities.
  • The banking system in Canada is highly advanced, and as such, it is simple for Canadian companies to transact over corporate bank accounts internationally.

TAXATION

  • Headline tax rates: CIT 15% (local income tax 1%-16%) (branches 25%), PIT 29% (provincial tax 10%-21%) (non-resident tax 7.2%-13.92%), VAT 5%
  • Treaty Jurisdictions: Algeria, Argentina, Armenia, Australia, Austria, Azerbaijan, Bangladesh, Barbados, Belgium, Brazil, Bulgaria, Cameroon, Chile, China, Colombia, Croatia, Cyprus, Czech Republic, Denmark, Dominican Republic, Ecuador, Egypt, Estonia, Finland, France, Gabon, Germany, Greece, Guyana, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Ivory Coast, Jamaica, Japan, Jordan, Kazakhstan, Kenya, Korea, Republic of, Kuwait, Kyrgyzstan, Latvia, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Moldova, Mongolia, Morocco, Netherlands, New Zealand, Nigeria, Norway, Oman, Pakistan, Papua New Guinea, Peru, Philippines, Poland, Portugal, Romania, Russia, Senegal, Serbia, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Tanzania, Thailand, Trinidad and Tobago, Tunisia, Turkey, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan, Venezuela, Vietnam, Zambia, Zimbabwe
  • TIEA Jurisdictions: Anguilla, Aruba, Bahamas, Bahrain, Bermuda, British Virgin Islands, Brunei, Cayman Islands, Costa Rica, Curacao, Dominica, Guernsey, Isle of Man, Jersey, Liechtenstein, Panama, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, San Marino, Sint Maarten, Turks and Caicos Islands, Uruguay

COMPANY FORMATION

  • Suitable for: Insurance, Fund Management, Aviation, Trading Financial, E-commerce
  • Company Types: Limited companies, public limited companies, trusts, sole proprietorships, general partnerships, limited partnerships and branches
  • Formation Cost: 1400 – 2400 USD$
  • Formation Time: 4 – 6 days
  • Maintenance cost: 700 – 1100 USD$

INCORPORATION PROCESS

  • Decide upon a name for your business, and check for its availability in the province you wish to set up your business in. The cost to register your business ranges from $60 to $80. Your registration is valid for five years, at which time it must be renewed.
  • Obtain a business number (BN) from the Canada Revenue Agency (CRA). BN is a 9-15-digit account number that identifies your company to federal and provincial governments. And a Québec Enterprise Number (NEQ) is required if you are incorporating in Quebec.
  • Decide as to whether your company would be incorporated provincially or federally. Provincial incorporation applies to a single state in Canada, while federal incorporation allows one to do business under the same name in all provinces and territories, but is more expensive and demanding.
  • Get Finances and Grants for Business: Getting enough finance for business is the most challenging aspect in the complete process. In Canada, there are both government and private-sector sources of finance that you can tap into to get your business started. The financing includes grants and contributions (which generally do not have to be repaid), loans, and loan guarantees (which generally do have to be repaid).
  • Get a business license: Even though it is not necessary for all the businesses, there are many new businesses that will need to get business license before they can operate legally within their municipalities. You may also need other permits depending on the type of business activity you conduct. You can do the Canada Business Permits and Licenses Search to get more clarity.
  • Register for a Goods and Services Tax (GST) or Harmonized Sales Tax (HST) account. If your annual revenue is over $30,000, you must register for a GST/HST account. Many companies with less revenue volunteer to register because once you have a GST/HST account you can get the taxes you pay as a company refunded by the government.