Tax Implications of registering your foreign company in Canada as a Branch

A branch is one of the ways a foreign company has to set up a business in Canada.  A branch is usually an adequate vehicle for low-cost projects. However, it is not the ideal choice for substantial projects because the parent company and branch office activities are not differentiated, the parent company is fully liable for the branch liabilities.

From a tax point of view, branches are permanent establishments of non-resident companies and a Canada branch is not a separate legal company from its parent.

The branch must have the same name as the parent company.

A branch of a non-resident company must appoint a resident individual or a company to represent it in its dealings with the tax authorities. The representatives may be held jointly and severally liable for the tax debts of the permanent establishments of non-resident entities, which they represent.

Tax Implications of registering your foreign company in Canada as a Branch

  • Income resulting from Canadian operations is taxable in Canada.
  • When computing taxes in the country of residence, losses may be offset against income. Losses may be carried back 3 years and carried forward 7 years against income earned in Canada by the Canadian branch.
  • Branch tax is normally payable annually on any after-tax profit not reinvested in Canadian property.
  • If the branch is taxable, foreign jurisdictions may give credit for Canadian income and branch taxes paid.
  • Branch tax which was previously deferred is payable upon the discontinuance of business, except for dividends on certain reorganizations that involve the formation of a Canadian subsidiary.
  • Licensing fees must be paid in provinces where a branch is established and the corporation operates. Apart from extra-provincial registration fees, no incorporation fees need to be paid.
  • Rules for allocating income may vary by jurisdiction, creating problems that affect tax credits
  • Interest, royalties and like expenses which are paid to non-Canadian residents and are deducted when determining Canadian branch profits may be subject to a withholding tax (unless reduced by treaty)
  • The depreciation of fixed assets is calculated at Canadian rates in order to determine Canadian taxable income. Foreign rates may govern in the foreign jurisdiction. This may create timing issues or other problems with claiming credit for Canadian taxes paid.

Register Today Your Foreign Company in Canada as a Branch

Company formations offer fast & easy Canada company registration for foreign companies wishing to operate an do business in Canada. The total fees for the registration of a branch in Canada are $2200 CAD.

Information and documents needed:

The information and documents required to register a foreign company in Canada as a branch are:

  • Company name
  • Company Address
  • Jurisdiction of Incorporation
  • Date of Incorporation
  • Names and addresses of the directors of the corporation
  • Copy of the certificate of incorporation
  • Copy of the articles of incorporation
  • Certificate of Good Standing

Branch registration Fees

The total fees for the registration of a branch in Canada are $2200 CAD

What our Canada Branch Registration Service Includes:

  • Provincial name search report or NUANS Report request
  • Preparation of the extra-provincial registration application
  • Provincial Registered agent service for 1 year
  • Filing of your extra-provincial registration application
  • Government fees
  • Taxes

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