U.S. companies do benefit from operating internationally regarding corporate tax rates. As of 2019, the United States’ national rate sits at 21%, with local rates varied, and branch rates 21%/31%. It can be a huge cost for companies, which is why many seek global operation options.
As of 2019, the Canadian corporate tax rate is 15%, which is one of the lowest internationally. Through an effort to drive economic growth in the country, Canadian officials continue to adjust these tax rates. To give you an idea of how quickly it’s moving down the scale, it was 18% in 2010.
Canada provides investors with unparalleled market access. Businesses operating here already benefit from preferential access to a North American market of more than 480 million consumers through the North American Free Trade Agreement (NAFTA). Once the Canada-European Union Comprehensive Economic and Trade Agreement takes effect, the additional market access will bring Canada’s free trade access to a total of more than 40 countries – with nearly 1.2 billion of the world’s wealthiest consumers and a combined GDP of $US37 trillion, representing one half of the world’s output of goods and services.
Whether your company plans to establish its own operations in Canada or seeks a Canadian partner to gain a base here for access to North American markets, Canada is where you must do business.
The Top 5 Benefits of Doing Business in Canada For US Companies are
1. Lower Corporate Tax Rates
Canada Continues to Lower its Corporate Tax Rates. U.S. companies can benefit from operating internationally regarding corporate tax rates. As of 2019, the United States’ national rate sits at 21%, with local rates varied, and branch rates 21%/31%. It can be a huge cost for companies, which is why many seek global operation options.
As of 2019, the Canadian corporate tax rate is 15%, which is one of the lowest internationally. Through an effort to drive economic growth in the country, Canadian officials continue to adjust these tax rates. To give you an idea of how quickly it’s moving down the scale, it was 18% in 2010.
2. Income Tax Treaty May Remove Burden for U.S.-based Companies
Businesses headquartered outside of the country are required to pay income tax on the profits earned from Canadian operations. But, there is a treaty that relieves some of the economic burdens. If your company does not have a permanent establishment (PE), which is defined in the income tax treaty, your operational profits are not subject to Canadian income tax.
A permanent establishment includes a fixed place in which you carry out business in the country. To skirt around a PE, you may sell products or services through an independent contractor that works for other companies. This may allow you to avoid paying Canadian income tax on your business’ profits. However, there are risks to consider when hiring an independent contractor.
It’s important to note that you’re not automatically off the hook if you do not have a PE. You need to pay compliance costs and claim the benefit of the treaty exemption by filing a Canadian tax return with details of your in-country operations. Using a partner service may be the best option for you to ensure you’re remaining compliant.
3. Doing Business in Canada is Familiar
Canada shares many traditions with the United States, which makes it easier for local business owners to begin operations to its north. For example, just like it is in the States, the most common Canadian greeting is a firm handshake, unlike operating in an Eastern country such as Japan where it’s customary to bow when you greet another party.
Canadian demographics are similar to the United States’. They share very close statistics to America in terms of religions and ethnicities. English is also one of the country’s official languages, along with French.
Regarding language, the people of Quebec, the second-most populated division in Canada, speak primarily French. We recommend that employees have one side of their business card translated into French and one side in English. When giving the business card to a new contact in Quebec, the employee should hand it to them with the French side facing up.
4. The Canadian Economy is Stable
In 2011, Canada ranked #1 in Forbes’ Best Countries for Business list. The country earned its top spot due to its trade freedom, investor protection, low corruption, minimal red tape, and low corporate tax rates. As of December 2018, Canada ranks #6 on the Forbes list; the United States sits at #17.
Canada’s stable economic growth from 2005 to 2014 is impressive because it withstood the test of the financial crisis, which began in 2008. The country’s major banks came out of the crisis as some of the strongest in the world. According to Forbes, this stability is attributed to the early intervention by the Bank of Canada and the organization’s conservative lending practices; damage was not nearly as bad as banks in the U.S.
Currently, the OECD has projected steady growth for Canada in the coming years. This stability is attractive to business owners looking for a trusted market to begin international expansion. For that reason, Canada may be the perfect test market for companies in financial services, digital media, and renewable energy.
5. Canada has a Highly Skilled Workforce
If you’re planning on hiring in-country employees, Canada has a great pool of people. Among the countries in the Organization for Economic Co-operation and Development (OECD), Canada ranks second for the highest share of 25-34 year-olds (61%) with tertiary education, and first in terms of foreign-born adults with a tertiary degree (65%). According to the Canadian Council for Social Development, nearly 45% of the country’s people are between the ages of 25 and 54 years old.
Registering a new company in Canada is a five-step process:
Step 1: Request Name Approval and Reservation
To ensure the public is not confused or misled by similar corporate names, new corporate names must be approved by the provincial registries office of your desired jurisdiction of registration. If you choose to use the incorporation number as the company’s name (for example 0123456 A.B. Ltd), you do not need a name approval and reservation. The incorporation number is assigned by the Corporate Registry office at the time the incorporation application is filed.
Step 2: Establish Your Company’s Articles
The articles are the rules for the company, shareholders, directors, and officers and they become part of the company’s formal records.
Step 3: Prepare an Incorporation Agreement
An incorporation agreement must be signed by each person (incorporator) forming the company. Usually, the incorporators will become the shareholders and directors once the company is incorporated.
The agreement becomes part of the company’s records and must contain:
The agreement of each incorporator to take one or more shares of the company The signature of each incorporator opposite their full name and the date each incorporator signed the agreement The number of shares of each class being taken by each incorporator.
Step 4: File Articles of incorporation and other Incorporation Documents
The fourth step is to file your articles of incorporation and other supporting documents with the corporate registry office of your desired jurisdiction of registration.
Step 5: Keep Documents as Part of Your Company’s Records
Once your application is processed and payment received, the corporate registries office of your desired jurisdiction of registration will send you the following documents by email or mail (depending on the notification method you selected):
The original Certificate of Incorporation
A certified copy of the Incorporation Application
A certified copy of the Notice of Articles
A cover sheet that includes the company’s incorporation number and business number
Fast & Easy Canada Company Registration Service for U.S. Companies and U.S. Entrepreneurs
Company Formations Canada provides fast and easy Company Registration in Canada for non-Canadians residents and provides all the documents your new Canada corporation will need to stay up-to-date and in compliance with your province of registration business corporation law.
Total Company Registration Fees
$2200 CAD (All-inclusive)
Our Canada Company Registration Service for non-Canadian residents includes:
- Name Search Report
- Preparation of Articles of Incorporation and Incorporation Documents
- Incorporation Agreement
- By-Laws, Company Minute Book, Share Certificates
- Canada Registered Agent Service for 1 year
- Government Fees
- Our Service Fees
- Original Certificates
- Copy of Documents in PDF
- Taxes
