Proximity and friendly relationship with the United States makes the idea of opening an international business in Canada attractive to many entrepreneurs who have ambitious outlook for the future. In addition to its close location to the United States and the positive reputation of its inhabitants, there are certain business-related benefits that make you take a closer look at this northern country.
Below we will discuss the five main advantages of choosing Canada as an international destination for expanding your business plans or establishing new projects.
- The Canadian tax system is one of the most affordable in the world and continues to gradually reduce corporate tax rates.
Foreign companies can benefit considerably regarding corporate tax rates, when they expand internationally. As of 2019, the United States’ national corporate tax rate level is 21%, with local rates varied, and branch rates are in the range of 21% – 31%. For comparison, as of the beginning of 2020, the income tax rate in Russia is 20%. This can be a considerable burden for companies seeking expansion in global markets.
Corporate tax rate in Canada is 15%, but this rate applies only on income received directly in this country, which is one of the lowest rates in the world for large economies. In attempt to stimulate economic growth in the country, Canadian government continues to adjust these tax rates to meet the business needs. To give you an idea of how fast it is declining, in 2010 the rate was 18%.
Any income earned outside of Canada is not taxable domestically in Canada.
Despite the territorial type of taxation, Canada has never been an offshore jurisdiction and is not on the black or gray offshore lists of EU, FATF, OECD countries, or any of post-Soviet countries.
Canadian economy is highly stable
In 2011, Canada ranked #1 in Forbes’ Best Countries for Business list. The country earned its top ranking owing to freedom of trade, investor protection, low level of corruption, minimal red tape and low corporate tax rates. As of December 2018, Canada ranked #6 on the Forbes list (for comparison: the United States is at #17 position). Canada’s robust economic growth from 2005 to 2014 is impressive as it overcame financial crisis which erupted in 2008 with no consdierable losses. Large banks of the country emerged from the crisis as one of the strongest in the world. According to Forbes, such stability is due to the early intervention of the Bank of Canada and the conservative lending practices of the organization. That is why the damage was not as tangible as in the United States.
The OECD currently predicts Canada’s robust growth in the coming years. This stability is attractive to business owners who are looking for a reliable market to begin their international expansion. For this reason, Canada can be an ideal market for companies looking to expand their international financial services, digital media, software development and renewable energy projects.
The huge trade turnover with China and the USA allows Canadian companies to be extremely effective in transoceanic trade.
It is no accident that the reputation of a company registered in Canada ranks very high in any country worldwide. Canadian companies encounter no bottlenecks in opening corporate bank accounts.
Canada has a highly skilled workforce
If you plan to hire employees domestically, then you will be pleased to know that Canada is a hub for highly skilled workforce from all over the world. One of the most developed immigration policies in the world allows you to quickly attract specialists on work visas from around the world. Even if you are not a citizen or a permanent resident of Canada, a company (start-up) registered in Canada will allow you to obtain the desired status using the simplified Express Entry procedure.
Among the countries that are members of the Organization for Economic Cooperation and Development (OECD), Canada ranks 2nd with the highest proportion of 25-34 year old population (61%) with higher education and 1st in the number of adults with higher education, born abroad (65%) According to the Canadian Council on Social Development, about 45% of the country’s population is between the ages of 25 and 54.
In addition, the multicultural environment of Canadian society promotes development of various innovative ideas for business. This is especially true for new businesses looking for their business models. Canada is also attractive because the living standards in the suburbs are much lower than in California or New York.
- A partnership registered in Canada is not a foreign controlled company, as it is primarily business registration rather than company incorporation. Accordingly, the Canadian Partnership is not a CFC and does not qualify for the automatic tax exchange and the need to report it to the tax authorities. Moreover, no automatic exchange of financial information is envisaged between Russia and Canada in 2020.
- The Canadian Companies’ registry is not publicly accessible, hence, third parties are not authorized to receive information about the company, its owner, profit and distribution of shares.
In 2020, the 5th EU Anti-Money Laundering Directive (EU AML) enters into force in the European Union, according to which almost all EU countries will be required to disclose information on “ultimate beneficial owners” in company registers.
QUESTIONS ON REGISTRATION OF A COMPANY IN CANADA
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