Louis J. Sapi
Ronnie Vaknin
Over the past several years, Canada has primed itself as a destination hub for foreign investment. With minimal market barriers, Canada has become one of the most lucrative direct investment destinations in the world. Canada, the tenth-largest economy in the world and is growing, is highly ranked in many key categories important in choosing a foreign country to invest in. For instance, our banking system has been ranked first among the G7 nations, and second globally.
Politically, Canada is considered an extremely stable and socially responsible country. It ranks in the top ten of the Corruption Perception Index and number one for ‘quality of life’. As a result of its extensive government initiatives, incentives, and programmes promoting innovation, Canada is considered to be the fifth most attractive country for highly skilled labour. It is also considered to be one of the most educated countries in the world, boasting 55% of its population to have graduated from post-secondary institutions. This offers foreign companies immediate access to a highly skilled workforce. Toronto also had the largest ‘brain gain’ of 2018, with approximately 55,000 highly skilled workers migrating in the tech space. This represents nearly 8,500 more workers added to the Toronto tech market, than the runner up – the Bay Area (Silicon Valley and surrounding areas). In fact, the Toronto/Waterloo/ Ottawa/Montreal corridor is a world leader in Artificial Intelligence (AI) and quantum computing. AI was originally invented in Toronto.
Canada also has a strong presence in many other industries, including aerospace, agri-food, biopharmaceuticals, digital media, machinery and equipment, mining, renewable energy, financial services, and software. These industries benefit from Canada’s multiple trade agreements. Canada’s three major trade agreements are: 1. The Canada-United States- Mexico Agreement (CUSMA) 2. The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) 3. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
These agreements promote trade internationally and allow foreign investors to take advantage of our vast transport infrastructure and easy access to the US market. Canada arguably has the best air transport infrastructure in the world, totalling 26 airports. It also has access to the Pacific Ocean on the west coast, the Atlantic on the east, and to the north, will eventually have access to the North West Passage. Together with the Great Lakes, Canada has 17 different ports. Having doorstep-access to the United States, with 117 different border crossings, the Great Lakes, and ocean routes, the possibilities of entering the United States are endless.
Canada has favourable privacy laws whereby the names of business ‘owners/shareholders’ are not disclosed in any public records. Only the company’s directors are made public in the federal or provincial registry system. Anonymity may be important to certain investors who do not want their names to be publicly disclosed. Three of Canada’s cities are also ranked in the top ten as the ‘most liveable’ cities in the world, creating real estate opportunity in the surrounding areas, as well as the need to ‘build upwards’ with skyscrapers and multi-unit dwellings. The real estate market in the major cities offers tremendous opportunities to international investors as real estate is considered very cheap and a better investment as compared to other major metropolitan areas around the world. Now is the perfect time to enter the Canadian market.
There is a cost advantage as the Canadian dollar is relatively low compared to the US dollar and the corporate tax system for Small to Medium Businesses (SMBs) is the most advantageous among G7 nations. If a company is foreign controlled, it will pay the ‘general rate of tax’ (around 26% in Ontario). Establishing a business in Canada is relatively easy. You do not need to be a citizen or resident where becoming a ‘business immigrant’ is welcomed. Certain provinces even allow you to incorporate a business without having a local, Canadian resident director. The political stability, the strength of the Canadian dollar, global faith in its financial institutions, a favourable corporate tax regime, a highly educated population, and diversity of industries all make Canada one of the most attractive places in the world for foreign investors.
Look for our next article discussing taxation in Canada.
XLNC MAGAZINE | No. 04 | November 2019