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

A Canadian subsidiary can be formed in Canada either at the federal level or at the provincial level. The laws applicable to corporate entities in each of these jurisdictions are generally consistent, but there are some important distinctions.

Generally, subsidiaries are registered in Canada as limited liability corporations, but certain provinces (including British Columbia, Alberta, and Nova Scotia) provide an alternative form of corporate entity: the unlimited liability company.

Unlimited liability companies are mainly chosen to facilitate favorable tax outcomes. You can also carry on business through a subsidiary formed as a partnership, trust or another type of entity, but special considerations may apply.

Corporate law in Canadian jurisdictions requires that the records of a corporation be kept in the jurisdiction of formation.

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

Income resulting from worldwide operations is taxable in Canada.
Losses are not generally deductible by the parent. Losses may be carried back 3 years and carried forward 7 years against income earned in Canada by the Canadian subsidiary.
Withholding tax is normally payable annually on any after-tax profit distributed as dividends to non-Canadian shareholders.
Foreign jurisdictions may give credit for withholding tax on interest and dividend payments. Some countries may also provide extra relief for the underlying foreign taxes paid on income earned in Canada.
Withholding tax is payable on deemed dividends resulting from the discontinuance of the company.
In provinces where the subsidiary does business other than the province of incorporation, incorporation fees must be paid and licensing fees generally must be paid.
The deductibility of interest on debts owed to non-Canadian residents may be limited.
The depreciation of fixed assets is calculated at Canadian rates in order to determine Canadian taxable income.

Register Today Your Foreign Company in Canada as a Subsidiary (Brand New Company)

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 subsidiary in Canada are $2200 CAD.

Information and documents needed:

The information and documents required to register a new company in Canada as a subsidiary are:

  • Proposed Company name
  • Proposed Business activity in Canada
  • Company Address in Canada (If any)
  • Jurisdiction of Incorporation
  • Names and addresses of the directors of the corporation

Subsidiary registration Fees

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

What our Canada Company Registration Service Includes:

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

, , , ,