The Leading Edge - Winter 2009 - (Page 12)

global top top 10 misconceptions about doing business in…Canada By gordon Jessup | fuller Landau CANADA IS A MuLTICuLTurAL SoCIETy. MorE ThAN 5 MILLIoN rESIDENTS LIST ThEIr FIrST LANGuAGE AS oThEr ThAN ENGLISh or FrENCh. 1 Canadian companies require resident directors. Canadian companies can be incorporated under the jurisdiction of a province, a territory or the federal government. Each Canadian jurisdiction has enacted its own Business Corporations Act and, while similar, each piece of legislation has variations. Most Canadian jurisdictions require at least one resident director and many require a majority of the directors be Canadian. This can be an impediment for foreign businesses wishing to establish a subsidiary in Canada. Nova Scotia and New Brunswick, however, do not require resident directors. By choosing to incorporate in one of these provinces a foreign business can set up a subsidiary without the need to find a resident to act as a director. These corporations can then register to do business in other provinces, even though they may not have any business activity in their province of incorporation. implemented the federal corporate tax rate will be 15 percent. Provincial tax rates have also seen reductions over the last few years and they range from a low of 10 percent to a high of 16 percent. Some provinces have announced future tax rate cuts, and once fully implemented combined federal and provincial corporate tax rates will range between 25 percent and 31 percent. Please note that tax paid to the province is not deductible in arriving at federal corporate taxable income. 3 Canada does not have any incentives for businesses. 2 Canada is a high tax jurisdiction. Traditionally Canada was seen as a high tax jurisdiction as corporate tax rates often were greater than 40 percent. However, Canadian governments (federal and provincial) have been successful in balancing their budgets, and the resulting surpluses have allowed them to reduce tax rates. In the 2008 budget the federal government announced reductions in the general corporate tax rate for the next several years. When fully Companies undertaking scientific research and experimental development in Canada are eligible to claim federal and provincial tax credits. The federal government provides a tax credit equal to 20 percent of eligible expenditures that is applied against federal income taxes. Several provinces also provide tax credits for research performed in their province. Companies that manufacture in Canada also enjoy tax incentives. Many provinces provide tax credits for manufacturing and processing undertaken in their jurisdiction. These credits reduce the effective corporate tax rate. The Canadian entertainment and software industries benefit from lucrative film-related tax credits. These tax credits significantly reduce the cost of Canadian productions. 12 VOLUME 9 n ISSUE 2 n WInTER 2009

Table of Contents Feed for the Digital Edition of The Leading Edge - Winter 2009

The Leading Edge - Winter 2009 Contents Stay on the Climb New Business Often Hinges on an Exceptional Proposal 2009: What’s Ahead and What's Behind for Businesses, Consumers and More Top 10 Misconceptions of Doing Business in Canada In a Nutshell: Q&A The Leading Edge Alliance

The Leading Edge - Winter 2009

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