Canada offers an exceptional business climate including ease of doing business, free trade with the rest of North-America, competitive business costs, fiscal incentives for innovation, low cost energy, exceptional quality of life, dynamic economy, access to credit, political stability etc.
World Bank ranks Canada 7th among 178 countries for the ease of Doing business
According to the World Bank's Doing Business 2008 several factors such make Canada one of the best place for engaging in business. Canada ranks particularly well for the ease in creating a new business (2nd), the protection of business investors (5th) and access to credit (7th).
Ease of doing business - Global rank (2007)
Source: Doing Business 2008 - Canada
NAFTA : free trade access to a 435 million consumers market
The terms of the North American Free Trade Agreement (NAFTA) between the USA, Mexico and Canada have created the richest free market area for North American business products and services.
Moreover, the NAFTA's chapter 16 facilitates the movement of business persons from these three countries within the area. The following categories of Canadian business persons are given easier access to the USA and Mexico: business visitors, professionals, intra company transferees, traders and investors.
Competitive business costs (KPMG)
According to the international consulting firm KPMG Canada offers the lowest business startup and operating costs within the G7 countries.
KPMG's Competitive alternatives 2008 compares the costs of doing business in industrialized countries in North America, Europe and Asia. The study takes into account some 27 cost elements in 17 activities. Countries include Canada, France, Germany, Italy, Japan, the Netherlands, Singapore, the UK and the USA
Source: KPMG and Ministère des finances du Québec
Low investment taxation
Data published by the Canada and Quebec ministries of Finance show investment marginal taxation rates to be particularly low in the Provinces of Quebec and Alberta, much lower than elsewhere in industrialized countries and the USA.
Quebec businesses in particular, pay one of the lowest rate of taxation of profits, are reimbursed for sales taxes paid on equipment purchases, and starting in January 2011, will no longer pay any tax on capital.
Note: Marginal effective rates: take into account all taxes and fiscal rules which affect the return on investmentqui influent sur le rendement de l'investissement.
Source: Economic and financial profile of Quebec (2008)
On 30 October 2007, Canada's minister of Finance announced a gradual lowering of corporate profit tax rates over the course of the next few years. In the words of the minister's Economic Statement:
- «With these reductions, the general federal corporate income tax &will be the lowest in the G7. (...) we will achieve our goal of having the lowest METR (marginal effective tax rate ) in the G7 by 2011, and will have a substantial business tax advantage over the US --a statutory tax advantage of 12.3 percentage points ...in 2012.»
Generous R&D fiscal incentives
Governments in Canada and Quebec encourage innovation and R&D. They have adopted several fiscal incentives to reduce the cost of innovation investment by business. For instance, in Quebec, for each dollar spent in R&D businesses recover close to 30 cents through fiscal mechanisms. This is more than in the other industrial nations.
Source : OECD, Ministère des finances du Québec
Furthermore, foreign R&D specialists and innovation management experts hired by enterprises in Quebec are given a 5 year total or partial income tax holiday. They do not pay tax on any income earned during the first 2 years, and in the 3rd, 4th and 5th year they only pay income tax on 25%, 50% and 75% of their income respectively.
Abundant and low cost energy
Canada's oil, gas and hydroelectricity represent a strategic advantage. Businesses buy their electricity at a much lower price than elsewhere which contributes to their competitive advantage.
For instance, as of January 2007, for each $100 electricity bill paid by Montreal based large enterprises, a comparable sized business would pay $406 in New York, $353 in Boston, $163 in Chicago.
Note: Paid by large enterprises - January 2007
Source : Hydro-Quebec
Quebec: one of the best places to invest in mining
According to the Fraser Institute Quebec offers the best environment for mining investment (2007-2008) ahead of the US state of Nevada, the Canadian Province of Alberta, Chile and Sweden among others.
Other advantages for business
Several other factors favour Canada as a place for doing business:
- Quality of life: according to the United Nations Canada is ranked 3rd among 180 countries for the quality of life it offers its population, ahead of countries such as the USA, Japan, the UK, France, Italy or Germany (please read Quality of life)
- Overall macroeconomic conditions and business opportunities (please read Economy of Canada and Economy of Quebec)
- Transparency of Canadian public institutions, democracy, political stability and the protection granted citizens by the Canadian constitution (please read Democracy and citizen rights)
- The quality of transportation infrastructures
- The quality of financial institutions and easy access to credit
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