Canada is a country located in the northern part of North America, covering about 9.98 million square kilometers, therefore making it the world’s 2nd largest country by total area. The Southern and Western borders of Canada are bordered by the United States, whereas its 10 provinces and 3 territories are extended from the Atlantic to the Pacific and in the Northward into the Arctic Ocean.
It has the world’s largest proportions of freshwater lakes, which makes it the 2nd largest country in the world after Russia. Canada is ranked as the world’s 10th largest economy since 2018 and also is known as one of the world’s least corrupt countries.
| Benefits of Doing Business in Canada | The Drawbacks of Doing Business in Canada |
| Availability of seed capital | The registration and incorporation period is quite long. |
| Availability of various grants by the government | Shortage in labor or of unskilled workers. |
| The cost of living is reasonable | Delay in resolving insolvency |
| The exchange rate is quite suitable and subtle | Challenges in funding for small businesses |
| Substantial reserves of gas, oil, and more. | Poor support of infrastructure |
Advantages of doing business in Canada
- Corporate tax rates are very convenient:
Companies always feel that high corporate tax rates can harm their business from reaching the heights of success. The corporate tax rate of Canada is 15% lower and is considered one of the west global rates. This is one of the major reasons that business entrepreneurs try to expand their business in the global market and choose Canada as a center as the corporate tax rates in their home countries can be comparatively high.
In contrast, the Canadian government often changes its corporate tax rates, making the trade conditions easier for the companies which increase economic growth, certainly in the long run.
- The income tax treaties are quite suitable:
Many companies who have their headquarters situated in a different country are bound to pay high amounts of income tax rates on the profits that the company has certainly earned. However, because of a special treaty released by the Canadian government, there is relaxation allowed to the companies which are situated out of the US.
In this treaty, PE or permanent establishment in Canada is not required and one can operate their business without thinking of the income tax on operational profits. PE is a legal entity of a company located in a foreign land. The location can be a fixed place or a place from where the business is mainly carried out completely or partially.
If your company is not having PE, then you will need to continue by paying the required costs according to the treaty. Then, at the end of the finance term, you will be allowed to assist your business with the benefits from the tax treaty and will need to file a Candian income tax return with the details of your business functions in the country.
- Straightforward Communication:
When you are setting up your business in a foreign land, it is very important to understand and mingle with the social and communicative norms accordingly. One should have a cooperative and uniting behavior with the local consultants present, which usually becomes a challenge if the country has a completely different culture.
However, Canada is considered to have straightforward and interactive behavior and cues which is very similar to the United States. The demographics between these 2 nations are very similar and the language spoken is English which is the most common language spoken across the world.
- Steady and Secured economy:
Canada is ranked in the 6th position according to the Forbes magazine, stating it as one of the most stable and secured economies. There has been an increase in the economic growth of Canada from 2005 to 2014. As the country has secured the freedom to do trade, low rate taxes, and also has a completely manageable bureaucracy.
Also, there is a seemingly great increase in the services, mainly in the financial sector, in the field of renewable energy, and also in the digital media market. Making it a suitable land for companies to consider establishing their business ventures.
- Educated population:
Canada has several top educational universities and institutes, which have a great reputation across the world. About 62% of the population of Canada is qualified with tertiary education, which is the 2nd highest rate globally. Therefore, if you are looking for hiring talent, Canada can provide you with knowledge and quality.
Disadvantages of doing business in Canada
- Delay in getting construction permits and electrical services:
The construction permit procedure takes up to 250 days and as a total of 12 steps which are an extremely time-consuming procedure. Also, the cost of the construction permits was increased in December 2017 by the government for commercial use, which therefore increased the fee rates for building permits as well as for the site plan approval.
In Canada, getting electricity is also quite difficult as it takes around 140 and in total 7 steps to complete the procedure and the electricity rates are also quite high specifically in the capital.
- High cybercrime rate:
The technological use in Canada is very high and the country is growing and using the technological aspects nearly in every field. However, with the help of technology, Canada has been a major target for cybercrime since 2015-2016.
According to the federal agency of Canada, there has been an increase of more than 160% of cybercrimes in the country since 2015 mainly in Winnipeg and Manitoba. The government also came up with a 5-year plan which included a budget of nearly $500m to fight cybercrime in Canada.
- Easy trading across borders:
Trading across borders is quite challenging because of the difference in the provincial regulations. Provincial regulations may include the packaging and labeling requirements, and also complete detail about the Canadian federal and provincial sales tax accounting. This is a place where the local businesses can help bigger companies by providing them with the differences in the requirements.
Similar Posts:
- 20+ Difference between TFSA and RRSP
- 18+ Pros And Cons of Doing Business in Paraguay (Explained)
- 25+ Pros And Cons Of Doing Business In Portugal (Explained)
- 18+ Pros And Cons of Doing Business in Slovakia (Explained)
- 17+ Pros And Cons of Doing Business in Israel (Explained)
Business, marketing, and blogging – these three words describe me the best. I am the founder of Burban Branding and Media, and a self-taught marketer with 10 years of experience. My passion lies in helping startups enhance their business through marketing, HR, leadership, and finance. I am on a mission to assist businesses in achieving their goals.