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Why Companies Should Invest in Canada

|Nov 9|magazine9 min read

 

Canada has become a viable country for companies domestic and foreign to utilize in business operation investment. With all types of industries eyeing Canada as their next frontier (especially the US retail market), Canada’s collaboration with foreign investment is beneficial for both parties. The Canadian Government’s acceptance of investment importance has created an even better market for foreign companies with the country’s tax credits and grants. This month, Business Review North America explains why Canada has become a leader in investment opportunities.

 

Economy

Canada was able to fare pretty well during the global economic recession, even better than its southern counterpart in the US. Not only has Canada recovered all jobs lost during the recession, it’s seen job growth as well. Statistics released by Invest Canada show that as of September 2012, 769,800 more Canadians are employed than when the recession ended in 2009. Canada overall has seen employment growth of 1.48 per cent from 2001 to 2011, reaching a percentage higher than Germany, Italy, the UK, France, the US and Japan.

Additionally, the Canadian Government’s implementation of stimulus packages, one of the largest among developed economies, during the global economic downturn, proves that the government is committed to growth.

“Canada understands the importance of its business community and has created an environment to encourage its success,” said Think Canada in an official report.

Industry analysts agree in the potential for Canadian business success. The Economist Intelligence Unit released its global business rankings in September 2012 with figures that showed Canada as the best place to do business in the next five years, in comparison to G-7 countries. Even further, Forbes’ ranked Canada as number one out of 134 countries in its annual study on the Best Countries for Business.

 

SR&ED

Another important way Canada is attracting more investment is through its scientific research and experimental development (SR&ED) tax incentive program. A program aimed at the private sector, SR&ED seriously benefits Canadian-based companies, foreign backed subsidiaries and Canadian Controlled Private Corporations (CCPC) by offering a 20 per cent to 35 per cent tax credit depending on corporation size and qualification.

Whether the company is large or small, or in which industry it operates, qualification is based on the investment and performance of R&D.  Other benefits to the program include the eligibility to deduct full costs of R&D machinery and equipment, no limits on subcontracting and the ability to earn tax credits for salary and wage costs for Canadian-resident employees that perform R&D tasks outside of Canada to support Canadian SR&ED projects.

Through this program Canada has seen success in the attraction and retention of investment.

“We have had a tremendous experience in Canada, having found great capabilities in R&D, engineering, processor development and software development. This has helped us grow from a company with $52 million in Canadian revenues in 1994 to $2 billion today,” said Robert Lloyd, Executive Vice-President for Worldwide Operations, Cisco.

This support from the Canadian government, federal and provincial, has led Canada to become a leading country for certain industry development, including the video game design industry.

"Forbes Magazine's most recent Best Countries For Business rating ranked Canada No. 1, citing our ability to skirt the financial meltdown that's plaguing the U.S. and Europe, our banking system's solid lending practices, trade freedom, a reformed tax structure and a lack of red tape," said Bill Elliot, Integrative Trade Consultant with Canada's Technology Triangle Inc. "When you add Ontario's strategic focus on gaming and digital media, government incentives can cut costs for game developers and producers by up to 40 per cent, and fast-track policies that make it easy for companies to relocate key personnel as well as their spouses, the Ontario Technology Corridor is a very compelling choice."