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As a high-skills economy with a strong focus on innovation, Canada has a huge amount of potential.
As one of the most straightforward countries in the world in which to operate, and with a comprehensive network of international trade agreements that provide access to $1.5 billion global consumers, Canada can lay claim to being one of the most attractive places to do business.
“We are fairly easy to deal with, even compared to our neighbours – much of the common investment registrations required from a tax perspective are streamlined, both at the federal and provincial level,” explains Alex Smith, partner at Grant Thornton Canada.
“It is a system that is very easy to navigate when you compare it to the United States which has 50 states and 50 tax regimes, each of them with rules that are at times archaic and overreaching. We are by far the more cuddly, friendly country [for business] with rules that are more uniform across the country.”
Valérie Verdoni, International Business Centre Director for Raymond Chabot Grant Thornton Canada, adds: “Canada has one of the largest treaties network in the world. As well as agreements with our neighbours in North America, we have trade deals with the European Union, South America and the Pacific nations.”
Canada boasts relatively low labour costs, and also a thriving innovation ecosystem based on its world-leading universities and research institutions. This has made parts of the country highly attractive to top technology businesses, Valérie explains.
The federal government has set up five superclusters across the country to promote collaboration and growth in specific subsectors: these include digital technology in British Columbia, protein industries in the Prairies, advanced manufacturing in Ontario, artificial intelligence in Quebec and ocean-related industries in the Atlantic region.
Valérie adds: “Around the city of Montreal there is a huge emphasis on areas like artificial intelligence, cybersecurity and even aerospace. There is a high level of talent here, and it costs a lot less to operate a technology company in Montreal than in New York or Silicon Valley, for example.”
Quebec’s e-business credit is a good example of a type of provincial incentive available to organizations operating in a variety of growth sectors, Valérie adds. “The questions we are most often asked by companies looking to set up in Quebec relate to this credit.” The incentive is based on salaries incurred by the company and may provide up to a refundable tax credit of 24%. The fact that this credit is refundable is the main reason why the credit is so interesting, as it becomes an important source of financing for an organization in its growth stage.
There is also a nationwide research & development tax credit worth up to 15%, which is typically bonified by a provincial R&D credit. The provincial R&D tax credit will vary from one province to another and may also be refundable depending on the province.
It should also be noted that there are significant incentives being developed by the national government in the clean energy industry.
Valérie says it often comes as a surprise to foreign investors how straightforward it is to incorporating a business in Canada. “Typically, it can be done in less than two days,” she explains. “It is also fairly easy to open a bank account and register for tax – especially when compared to more bureaucratic systems”
Meanwhile, the country’s provinces are slowly moving away from the requirement to have a Canadian national on the board of Canadian incorporated company thus making it easier to manage new Canadian footprints.
The system can be more challenging when it comes to having tax collected, Alex adds. “But that’s all a question of mapping out your structure and planning well in advance. I don’t think that’s very different to most other countries.” Canada’s competitive banking sector means there is good access to debt finance, while the Toronto Stock Exchange is North America’s third largest by market capitalisation.
Another challenge for businesses looking to sell goods into the Canadian market is the sheer size of the country. “If you’re thinking about shipping across the whole of Canada, you’re probably going to have to consider setting up in multiple locations,” Alex points out. “The area known as the Golden Horseshoe in Ontario is the most densely populated area in the country, so that’s often the best option in terms of a distribution centre if you’re selling to the consumer market.”
Another compelling reason to consider Canada is the country’s quality of life: it ranks in first place among the G7 nations for overall living conditions and peacefulness. “This is a big plus not just for expats but also for students,” Valérie explains. “For many years, it has been the government’s strategy to attract foreign students to come here, realise what a great place it is, and stay to work or start their own businesses.
“The result is that Canada is a highly multi-cultural society, with a highly educated workforce and strong entrepreneurial culture.”
Access a world of resources, connections and expertise to help your international plans
Selling into, supplying or setting up operations in Canada can be a step into the unknown. At Grant Thornton, we have the experience to guide you. Our International Business Centre directors can co-ordinate access to international teams, resources and global delivery, while also helping you forge valuable trading relationships in the Canadian market.
Alex Smith
Partner & IBC Director
Grant Thornton Canada
T +1 416 360 5042
E alexander.smith@ca.gt.com
Valérie Verdoni
Senior Director & IBC Director
Raymond Chabot Grant Thornton
T +1 514 390 4192
E verdoni.valerie@rcgt.com
