Doing Business in Canada – Top 5 Benefits of Operating North of the US

Below we explain five of the top benefits for choosing Canada as your next international expansion destination:

1. Canada Continues to Lower its Corporate Tax Rates
US companies do benefit from operating internationally regarding corporate tax rates. The local corporate tax rate currently sits at 39%. It can be a huge cost for companies, which is why many seek global operation options.

As of 2012, 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.
Many provinces, including Ontario (Canada’s largest), include a 10% add-on. This results in an aggregate effective Canadian corporate tax rate of 25%. This corporate tax rate is still the lowest in North America.

2. Income Tax Treaty May Remove Burden for US-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.