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Tax Minimization in Canada

Tax Minimization in Canada

Taxation is an important factor when deciding for a country to open a company in. Foreign investors who seek to register their companies on the North American part of the continent are aware of the fact that the incentives offered by the Canadian government are consistent which is why they choose this country to operate in. Moreover, the Canadian tax legislation makes a clear difference between tax minimization, which is a suite of solutions enabling companies to legally reduce the taxes they pay, and tax evasion which is an illegal way of reducing the payment of levies imposed by the authorities.

There are various ways in which taxes can be minimized in this country which will be explained by our Canadian company formation consultants below.

Tax minimization solutions for companies in Canada

The Canadian government through the Tax Law provides for several ways of reducing the taxes paid by local and foreign companies with operations in this country. Among these are:

  • tax credits;
  • provincial tax incentives;
  • federal tax incentives;
  • industry-based tax deductions, credits and reductions.

Also, Canada has signed numerous double taxation agreements which provides for the avoidance of paying certain taxes twice: once in Canada and the second time in the country of residence of a foreign citizens or company with operations here.

Our company registration agents in Canada can explain how avoidance of double taxation can occur. Foreign companies can also rely on us for accounting services.

Tax credits and incentives available for companies in Canada

The Canadian tax authorities provide for various tax incentives and credits which are great tax minimization solutions for companies here. Among these are:

  • the 10% income corporate tax reduction for investments in machinery, equipment, real estate for various industries such as manufacturing and processing;
  • the 15% non-refundable credit on research and development (R&D) activities;
  • the 35% tax credit on R&D expenditures for Canadian-controlled private companies;
  • the 15% reduced rate for sole proprietorships and trusts;
  • other tax incentives for the media and environmental sectors.

For full information on the tax minimization tools and assistance in setting up a business in Canada, please contact our local representatives.