Canada is often a country of choice for business owners who want to expand into a foreign market. Its geographical location makes it considerably easier than many countries to have commercial relations with the powerhouse market that is the US. Added to this are other factors like the availability of a skilled workforce, an abundance of natural resources like gas, oil, and timber, and favorable trade treaties. In recent years, several large multinational companies have opened new offices in Canada. If you are considering doing the same, plainly it is important that your decision is a well-thought out and well-informed one. To assist in that regard, in this article we present five key benefits of doing business in Canada as a foreign company.

5 Reasons Why You Should Be Doing Business in Canada

1. Favorable Income Tax Treaties

Most companies that have headquarters in a different country need to pay hefty income taxes on the profits that they earn. In Canada, however, there is a provision that allows for some room for relaxation for companies based out of the US. This treaty allows a company that does not have any permanent establishment (PE) in Canada to do business without bearing the cost of income taxes on its operational profits.

2. Lower Corporate Taxes

One of the primary reasons why businesses seek to expand into a global market is because of high corporate tax rates in their home country. Companies often feel that high corporate tax rates are detrimental to their success. This is especially true in an economy like the US where the national corporate tax rate in 2019 is at 21%.

In contrast, at a corporate tax rate of 15%, Canada has one of the lowest global rates (it was 18% in 2010). The Canadian government revisits this rate frequently with the purpose of making the trade conditions friendly for companies. This, in turn, is directed at achieving better economic growth in the long run.

3. A Stable Economy

Ranked in 6th position on Forbes Best Countries for Business list, Canada is a comparatively stable economy when compared to the US (rank 17 as per the same list). In fact, the continuous economic growth seen by the country from 2005 is a testament to this very fact. Some of the reasons for this stability are the freedom to do trade, the above-mentioned low tax rates, and the controlled bureaucracy.

For example, in 2008 when the financial downturn rocked the economies of a number of countries globally, Canada was able to recover quickly from the crisis due to the timely interventions of the Bank of Canada regarding its lending practices.

As it stands, international think tanks and institutional observers continue to predict sustainable growth for the Canadian economy and that is a solid reason why companies should be considering doing business in Canada.

4. Availability of Skilled Workers

Due to its good universities and institutes for vocational training, Canada has a high availability of skilled people in the workforce. According to Organisation for Economic Co-operation and Development (OECD), the number of 25-34 year olds in Canada with tertiary education is 62%; the second highest globally. Additionally, due to its friendly immigration practices, the number of employable foreign-born individuals above the age of 18 with a tertiary degree is the highest in the world at 65%.

Thus if you are planning to expand your business to Canada and need to hire talent from within the country, you can rest assured that you will get the quality that you are looking for.

5. Social Similarity to the US

When taking your business ventures to a foreign nation, it is essential to understand the social norms in order to flourish. Without the right caching from local consultants, this can become a hindrance in countries with vastly different cultures. However, Canada is very similar to the US in terms of social behaviors and cues. Most people greet each other the same way and have almost identical demographics. Even language is not a barrier, save maybe for Quebec (but many speak English there too).

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