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Starting a new company is the easiest in the world in Canada. At least this is what a study by the World Bank, whose analysts compared business conditions in 155 countries, claims. A very attractive location for establishing a foreign company. Canada, which has signed double taxation treaties with more than 90 countries, offers non-residents the opportunity to establish several types of companies.

Advantages of establishing a company in Canada

Setting up a business in Canada gives you access to a developed, rich market with a quality client base. In addition, Canada opens the door to the best market in the world – the United States. That's where your business can continue to grow.

If you already have a company incorporated in your home country and you want to expand into Canada (and you are not a resident of Canada), you need to set up an „Extra-Provincial Corporation“. Its establishment is relatively simple and straightforward. They are always governed by the rules of the territory where the company was established. Although these rules differ slightly in individual territories, they are basically very similar everywhere.

Tax benefits are applied for small and medium-sized companies, which can also bring a tax contribution. This is how the Canadian government is trying to motivate the business sector. Non-resident companies with only a branch in Canada are subject to 38% tax, but this rate can be reduced under double taxation treaties.

The simplicity of establishing a company is one of the criteria for choosing a company seat. Out of 155 countries, Canada ranked 1st according to the World Bank.

Of course, Canada is not a classic offshore jurisdiction. It does not offer 0% taxation. Canada is different. It is a stable, strong economy that will ensure that your company gains respectability in the eyes of foreign partners and clients, bringing your business to a new level and new markets (Canada, USA).

Disadvantages of Incorporating a Company in Canada

There are three types of companies – Society, Partnership, or Corporation. But keep in mind that in the case of a Corporation, at least 25 % of the directors must be Canadian residents.

Canada is very cautious about foreigners, which is why a Canadian resident is needed whenever a company is established. If an entrepreneur establishes a Partnership type company together with another partner, one of the partners must be a Canadian resident.

Income tax for resident entities is set at 15 %, while withholding tax on dividend payments is 25 %. To the income tax, it is necessary to add the territorial income tax, which varies between 10 % – 16 %. If you want to live and do business in Canada, you need to apply for a business investor visa.

Basic information

  • Type of legal entity: Limited Liability Company (LLC) or LLP
  • Establishment time: three weeks
  • Number of shareholders: in LLC named „members“ minimum 1, maximum not stated
  • Shareholders: members can be FO or business entities
  • Share capital: not defined
  • Shares on bearer: not allowed
  • Registered address is mandatory, but does not have to be physical
  • Local registered agent required
  • Directors: minimum 1, maximum not defined
  • Director residency: the director must be resident in Canada

Taxation

  • Federal corporate income tax 15 %
  • Branch tax rate 15 %
  • Federal capital gains tax rate of 7.5 %
  • Dividends 25 %
  • Net operating losses can be carried against both past income (up to 3 years) and future income (up to 20 years)
  • Double taxation agreements with various countries were applied, determining tax rates on dividends, interest and royalties
  • Accounting. Billing and preparation of accounts is required
  • Audit is required depending on the type of business and turnover of the company
  • Anonymity and privacy. Information about directors (administrators) and shareholders is open in the commercial register

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